UNDERSTANDINGMESSAGING APPS & BOTS

25/07/2016

Why Care?INTRODUCTION

Messaging apps are the social networks created for the smartphone era – currently untapped by the majority of brands in the UK, not least because messaging platforms are still formulating their brand offering, it is a trend that will shape how we think about digital in the years to come

This first section of this Spotlight will explore messaging:

-how a smartphone first culture has precipitated messaging’s popularity and transformed the way we communicate-why there were more than 1.4 billion people (75% of all smartphone users) using messaging apps by the end of 2015-the current major players and advertising options-And how messaging is becoming the entry point into the internet

The second part will show how messaging apps intend to use the chatbots that inhabit them to:

-become the focal point for internet search via personal assistants-drive conversational commerce-offer seamless customer service

Lastly we will analyse the potential long-term implications:

-The end of search as we know it-The end of websites as the main commerce destination-The end of apps-And Apple as the next Blackberry

THE MOBILE ERA: A breakdown on the impact of Smartphones and the internet

THE GROWTH OF MESSAGING APPS:

Stats on how Messaging Apps have grown. The social network for the mobile era

EXPLAINING THE POPULARITYBEHIND MESSAGING:

What do users like about Messaging

MAJOR PLAYERS: Who are the major Messaging Apps and what advertising do they offer

CHATBOT USER SCENARIOS IN THE WEST:

How do these Messaging Apps intend to use chatbotsfor search, commerce and customer service

CURRENT BARRIERS: Current Barriers that chatbots have to overcome: user mind-set and technological limitations

OVERCOMING BARRIERS How a demand for a better user experience and the drive from Facebook, Google and others can force change

LONG TERM IMPLICATIONS The implications of chatbots for search, commerce, apps…. And Apple

KEY TAKEOUTS: Top 5 key takeouts

WHAT’S INSIDE

• Smartphones are replacing computers for internet use: Two-thirds (65%) of all adults use a smartphone to go online; up by 4% since 2014. Smartphones are the only device used to go online, at home and elsewhere, by a majority of adults.

• Smartphones are the preferred device for five out of nine online activities Internet users are more likely to say that they use a smartphone (rather than any other device) for social media, listening to streamed music, watching short video clips, looking at news websites or apps, and surfing or browsing online

• Mobiles are now the most-missed media device among all adults While in 2014, adults were most likely to say they would miss their TV set the most (37% vs. 30% in 2015), mobile phones are now the most missed media device (38% vs. 32% in 2014)

• Two-thirds of adults with a profile use social media more than once a day, and they are most likely to do so on a smartphone Two-thirds (65%) of adults with a social media profile visit any social media site or app more than once a day, unchanged since 2014. This rises to 85% of 16-24s. Just under six in ten (57%) of those who ever go online to look at social media sites or apps say they mostly use a smartphone to do

• There has been a considerable rise (from 6% in 2014 to 16% in 2015) in the proportion of adults who only use smartphones or tablets to go online, and not a PC/laptop. In other words, these newer devices are not just supplementing PCs/laptops, but are starting to replace them. This pattern is seen across all ages of adults, across all socio-economic groups and for males and females

Why Care?THE MOBILE ERA

Ofcom 2016 media habits

A SMARTPHONE FIRST CULTURE

“THE PC IS FADING IN RELEVANCE, AND THE BROWSER ALONG WITH IT”Ben Thompson

Why Care?THE GROWTH OF

MESSAGING APPS

According to eMarketer, more than 1.4 billion consumers were using messaging apps by the end of 2015; that’s 75% of all smartphone users

and an increase of 31.6% over the previous year.

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WhatsApp WeChat FacebookMessenger

Snapchat YouTube Twitter Instagram Facebook

Which of the following services have you actively engaged with or contributed to in the past month via any device?

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Q2 2015 Q3 2015 Q4 2015 Q1 2016

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Which of the following services have you actively engaged with or contributed to in the past month via any device?

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Messaging apps

Messaging apps

THE NEW SOCIAL: MESSAGING APPS. SOCIAL NETWORKS CREATED FOR THE SMARTPHONE ERA

Charts sourced from GWI. Please note charts have different scales

Why Care?

Messaging apps and their popularity are why many are hailing bots as the future to how we will use the internet. Ben Eidelson, ex product manager of Google, identified three reasons why messaging has become so popular:

ASYNCHRONOUS BY DEFAULT, SYNCHRONOUS WHEN APPROPRIATEconversations can seamlessly escalate from a slow back-and-forth, sometimes spanning many hours, to the quick synchronicity of old-school desktop chat. As a result, we’ve largely done away with the ‘brb’ and ‘u there?’. The sender knows you’ll be there when you’re there. This behaviour is fundamentally enabled by mobile—the product expectation is that a sent message will sit in the recipient’s pocket until they can and desire to answer it.

LONG LIVED CONVERSATIONSOne of the most powerful aspects of messaging is the treatment of messages within the context of a long lived conversation. The conversation is the container that is defined as between two (or more) people, not based on topic. In fact, much like real-life conversations, topics change constantly. These long lived, multi-topic, conversations are what make messaging the best digital representation of your relationships. If you ask someone “pull out your phone and show me where your significant other exists on this device?” the answer is not in the address book, email threads, or their social profile, it’s in the messaging conversation.

THE CONVERSATION LISTThe conversation list is the hub of all of the relationships in your life. The list is quite simple—the conversation that had most recent activity (inbound or outbound) is also the one that you’re most likely to hop back into, so it’s up at the top. This simplicity is powerful—there’s no need to signal to the messaging apps who is the most important. The most important conversations naturally live at the top. Conversations that are days old fall down the list gracefully, but can be resurrected just as easily. Conversations are mostly from people you care about means that the conversation list is a great approximation for ‘who do I care about talking with right now’.

WHY MESSAGING APPS ARE POPULAR

“MESSAGING …THE CHILD OF THE SOCIAL AND MOBILE PLATFORMS” BEN EIDELSON

Facebook Messenger:

Globally 900 million people use Facebook Messenger each month

• In just over a year Messenger has increased its user base by 300% (Apr 14 to Dec 15)

• Messenger is the second most downloaded app of all time (behind Facebook)

• Messenger is the most popular messaging app in the UK and the second most popular social network, behind Facebook

• Advertising: yes, currently testing Sponsored Messages and Click To Message ads

KEY STATS:

MAJOR PLAYERS

WhatsApp:

1 Billion people use WhatsApp

• 62% of Whatsapp users use the app more than once a day

• 1.6bn photos are shared daily

• WhatsApp is the second most popular messaging app in the UK and the third most popular social network, behind Messenger Facebook

• Advertising: no

WeChat:

697m active users

The most popular social network in the Asia Pacific region

• The most advanced messenger app of them all. A comprehensive eco-system that includes:

- Ecommerce (e.g. booking/paying for a cinema ticket, paying bills)

- Customer Service

- Banking

- Advertising: yes, with WeChat’s moments (think Facebook’s newsfeed)

KIK (the Wildcard):

Globally 275m users

• Kik claims as many as 40% of US teens are on the chat app

• 2 years before Messenger, Kik focused on bots and now boasts 3,000 bots and has a Chatbotstore

• Advertising: yes, native-ad experiences in which Kik Points, used to buy emojis and other Kik content, are awarded for viewing ads or playing branded mini games.

AND LATECOMMERS

Google launched its messenger app in May. Called Allo , it’s a “smart messaging app” that uses the full armoury of Google artificial intelligence :

• When your friends message you Allo offers you a choice of responses it thinks you might want to use

• e.g. a friend asks you to dinner, one of Allo’s suggested responses is “What time?” The more you use Allo, the more Smart Replies will start to sound like you.

• Allo can also make reservations for restaurants, find sports scores, providing the capabilities of Google Search. Significantly the user won’t need to move away from Allo to tap into search

Is it too late to make an impact? • Google is playing catch-up and has

ground to make up, particularly on Facebook where Messenger regularly tops the download charts

• As Google found with Google+ , it’s hard to persuade people to adopt another social network when they’re already fully immersed into the one that they’re currently using- if their friends are not on there already what’s the point? And Google’s competitors have a stranglehold on the messenger market. Will automatic replies be enough to encourage user migration to a new app? It’s debatable

GOOGLE ALLO

Why Care?AN ENTRY POINT INTO THE

INTERNET

MESSAGING APPS AS YOUR SECOND SCREEN

• Mary Meeker’s 2016 internet trends report showed how messaging apps have increasingly become a smartphone user’s second home screen and their entry point into the internet, debunking the previously commonly held assertion that the mobile home screen is the portal into people’s mobile device

• Smartphone users are consolidating where they spend most on their time online: Meeker’s report found that although typical mobile users around the world have about 33 apps installed on their phones, they spend 80% of that time in one of three apps: Facebook, Facebook-owned WhatsApp, or Chrome

Social is changing

CHATBOTS USER CASE SCENARIOS IN THE WEST

Messaging apps are developing chatbots to act as your own personal assistant, competing with Siri and Alexa; Facebook has M and Google will introduce Google Assistant. These bots will offer a conversational interface that essentially is a new product for searching. The Personal Assistant will be able to:

• ask a question for an answer, and follow up with multiple questions e.g. a user can ask to see a list of movies playing nearby. Following that, if a user adds, “I want to bring my kids this time”, the search results will be refined as to only show child-friendly films

• Other features include being able to make restaurant reservations, finding a birthday gift, suggesting—and then booking—holidays.

• In short, as Google states about its assistant, the aim of these chatbots is for the user to: Get answers, find information, and get things done without ever having to leave your conversation. (or app)

FACEBOOK’S M GOOGLE ASSISTANT

“HUMAN LANGUAGE IS THE NEW USER INTERFACE. BOTS ARE LIKE APPS AND DIGITAL ASSISTANTS ARE LIKE META APPS, OR THE NEW BROWSERS. “SATYA NADELLA, CHIEF EXECUTIVE MICROSOFT

CHATBOTS FOR PERSONAL ASSISTANTS

Social is changing

CHATBOTS USER CASE SCENARIOS IN THE WEST

Traditional e-commerce journey: you go to a website.You have to create an account - that's one email. You add something to your shopping cart and check out - that's another email. The package ships - that's another email.When it arrives, that's another.

That's four emails that are distinct threads that are not canonical.

Impact: It's painful on desktop, it's impossible on mobile. That's why, for the majority of online retailers, 60% of their website traffic is mobile - but only 10% to 12% of checkouts are mobile. And mobile traffic will continue increasing.

THE PRESENT

Messenger's answer is to enable businesses and customers to communicate through conversation threads

Impact: e.g. order a T-shirt and you get a message with a shipping notification and a map . A purchasers whole history with the outlet is on that thread

After months without any contact a consumer can just message to order - and the outlet can reply, 'Would you like the crew type like your previous T-shirts?‘

Once you interact with a business, you open a thread that will stay forever. You never lose context, and the business never loses context about who you are and your past purchases

A seamless experience

THE FUTURE

CHATBOTS FOR CONVERSATIONAL COMMERCE

Social is changing

CHATBOTS USER CASE SCENARIOS IN THE WEST

• Bots will allow people to order products, or return them, by just talking to a robot. That automated customer service rep would be able to send back programmed replies —taking people through the entire process of returning a product that they don’t like, for example.

• Brands like KLM and Hyatt have already integrated Facebook Messenger into their digital mix. “The addition of Messenger to our around-the-clock social care efforts was a no-brainer. It’s just one more channel in which we get to have meaningful conversations with guests and help them to be their best, on the road and right away. But the biggest advantage is that it effectively makes Hyatt a person inside the ecosystem and adds accountability — with the typing indicators, ‘read’ and ‘last seen’ notifications.” Dan Moriarty, director of digital strategy and activation for Hyatt.

CHATBOTS FOR CUSTOMER SERVICE

“YOU SHOULD BE ABLE TO MESSAGE A BUSINESS IN THE SAME WAY YOU’D MESSAGE A FRIEND” MARK ZUCKERBERG

CURRENT BARRIERS

The barriers are big, not least requiring a wholesale change in customer mind-set to how we currently think about shopping. Social is used for inspiration, browsing, discovering yes, but not shopping. In the most part, unsurprisingly, we are using social networks how they’re intended to be used: posting pictures, giving updates, consuming content, it’s quite a transition in behaviour to go from this to becoming an active shopper.

Even with the potential hegemony of a messaging app, as China’s WeChat has show, it’s a further stretch to go from using a web interface to conversational commerce- users and brands want that simple web interface , just within a messaging app

At the moment the hype surrounding chatbots is not based in the reality of what they’re currently offering: an experience that is full of confusion and misunderstanding. Far removed from the seamless experience Mark Zuckerberg is been selling us.

Such a difficult user experience will mean that early adopters are unlikely to return and importantly are also unlikely to recommend chatbots to their friends, stymieing any potential word of mouth snowball effect

“ chatbots leave you with that same itch in the back of your mind that it’s easier to get the weather or send flowers the old-fashioned way.” (GIZMODO)

CULTURAL:

CHANGING USER MINDSET

PRACTICAL:

CURRENT LIMITATIONS

Inspired by WeChat

FOR WECHAT MENUS WEB VIEW STILL REIGN SUPREME NOT

CONVERSATIONS

CURRENT BARRIERS:WECHAT CASE STUDY

These western messaging apps are all, as KIK founder Ted Livingston described, aiming to “become the WeChat of the West”: the go to destination for people to chat to friends, but also to order a taxi, buy take-out food and shop for clothes. WeChat’s impact in China has been such that more official accounts (brand accounts) are created on WeChat each day in China than websites brought online and has reduced the average number of apps used to just 2 (WeChat and Sina Weibo) .WeChat has created total saturation among both users and businesses.

But as Dan Grover, product manager at WeChat, argues that what people wanted wasn’t to be able to have a conversation with brands, but more conventional input mechanisms such as multiple choice answers or buttons that appear in chat bubbles. As he notes WeChat carried the “make every interaction a conversation” torch as far as it could. It added countless features to its APIs — and yet those that actually succeeded in bringing value to users were the ones that peeled back conventions of “conversational” UI. Most instructively, these successes were borne out of watching how users and brands actually used the app and seeking to optimize those cases.

Grover uses ordering a pizza to illustrate his point of conversation threads (he uses Microsoft’s Skype Bot as an example) vs. WeChat’s current model of HTML5 menus and webview interface to highlight conversational commerce takes 73 taps, compared to WeChat’s 16 taps.

As analyst Connie Chan tweeted: If texting takes more time than clicking a button on a webview, why is it better?

WECHATCOMMERCE

CONVERSATIONCOMMERCE

OVERCOMING BARRIERS

THE USER BASE EXISTS ALREADY

Fertile foundations: Messaging apps don’t have the problem of converting users who aren’t there; the most popular messaging app, Facebook Messenger, has 900m active users and is the second most popular social network (behind Facebook) in the UK

Once you have this user base it’s easier to set about broadening how people use messaging; we can point to how Facebook has diversified their network and how users have followed to understand potential

CHANGE WILL BE DRIVEN FROM BELOW

Smartphone users are organically moving towards an integrated experience: messaging apps are acting as an entry point into the internet, becoming a second home screen to many people already. The chatbot personal assistants (M ,or Google Assistant) tap into this existing demand, offering a seamless search experience for the smartphone era and removing the disruption of having a separate app for search

AND ABOVE With Google and Facebook embracing chatbots as the future, the way we use our smartphones and think about messaging will be forced to change –as Facebook, for example, has shown when itseparated its messaging function to become a separate platform, forcing people to download it as an app, they have the weight to help force change from above

IN 1995 NEWSWEEK PRODUCED AN ARTICLE TITLED “THE INTERNET? BAH!”.

Yes chatbots currently are very limited. Like the internet in 1995, it’s a mess. Like the internet in 1995, it will get better. What we’re seeing at the moment is the first iteration of chatbots on messaging apps, often rushed out to be the first brand on there, while developers are still experimenting with capabilities. We’d be naive to think that the first chatbots will have the same limited capabilities that they currently have in the next few years- once this usability improves the conditions are there for chatbots to flourish

LONG TERM POTENTIAL IMPLICATIONS

Conversation bots will be the search function for the mobile era. the information they need through asking bots in likely to want to open up a different search

In results, businesses will also be able to pay for greater visibility results.

Conversational commerce will make having a brand presence within a messaging app of greater necessity than the traditional website

Iwhy would a user choose to leavethreads mean the business and the customer and your past purchases

Bots run are no apps to download. Users get individually through the messaging platform will mean users won’t have to download individual apps for each company that they

Facebook, or another competitor, will

“No to interact

THE END OFSEARCH AS WE KNOW IT?

Conversation bots will be the search function for the mobile era. If users can get all the information they need through asking bots in Messaging Apps, they'll be less likely to want to open up a different search product

In the same way Google charges advertisers to appear higher in suggested search results, businesses will also be able to pay for greater visibility for Messenger search results.

THE END OF WEBSITES AS THE MAIN COMMERCE DESTINATION?

Conversational commerce will make having a brand presence within a messaging app of greater necessity than the traditional website

If a user can find and buy the items that they want within the messaging app, again, why would a user choose to leave– the added benefit is that these conversational threads mean the business and the customer never lose context about who you are and your past purchases

THE END OF APPS?

Bots run in the background of a company’s Messenger service. That means that there are no apps to download. Users get convenience; the ability to talk to companies individually through the messaging platform will mean users won’t have to download individual apps for each company that they use.

Facebook, or another competitor, will gets its own alternative to Apple’s App Store

“No one wants to have to install a new app for every business or service that they want to interact with” Mark Zuckerberg

AND APPLE AS THE NEXT BLACKBERRY?

Marco Arment has argued that if the future is advanced AI, personal assistants and voice interfaces Apple is too far behind to be able to challenge and there’s no quick fix.

“Apple will find itself in a similar position as BlackBerry did almost a decade ago: what they’re able to do, despite being very good at it, won’t be enough anymore, and they won’t be able to catch up.”

KEY TAKEAWAYS

THE MOBILE ERA WILL CHANGE HOW WE USE THE INTERNET

Two-thirds (65%) of all adults use a smartphone to go online; with the emergence of messaging apps as a second home screen we’re already seeing how a more user-friendly mobile experience can change our user habits

MESSAGING IS THE SOCIAL NETWORK FOR THE MOBILE ERA

Facebook Messenger and WhatsApp are the second and third most popular social networks in the UK; overall, more than 1.4 billion consumers were using messaging apps by the end of 2015; that’s 75% of all smartphone users and an increase of 31.6% over the previous year

CHATBOTS ARE THE BROWSERS OF TOMORROW

Chatbots- and personal assistant chatbots in particular – will provide a seamless form of search within messaging without the interruption of going to a separate app for search; tapping into smartphone user behaviour that is consolidating its app usage rather then diversifying

EXISTING USERBASE AND IMPETUS FROMABOVE AND BELOW WILL DRIVE CHANGE

Smartphone users demand for a seamless mobile experience and a consolidated offering gives messaging apps the platform to drive change within a user base that is larger than any other social network apart from Facebook

THE END OF SEARCH,APPS AND WEBSITES AS WE NOW KNOW IT

If chatbots successfully become part of the fabric of our smartphone user behaviour the need to go to separate apps becomes increasingly obsolete, putting the long-term future of search, apps and websites in doubt

APPENDIX

http://stakeholders.ofcom.org.uk/market-data-research/other/research-publications/adults/media-lit-2016/

http://www.emarketer.com/Article/Mobile-Messaging-Reach-14-Billion-Worldwide-2015/1013215

https://medium.com/@ben8128/the-messaging-landscape-in-2016-13b25cdf2f6e#.x6fmeo38q

http://www.theverge.com/2016/5/18/11699122/google-allo-messaging-app-announced-io-2016

http://www.techinsider.io/no-one-will-use-google-allo-messenger-2016-5

http://www.recode.net/2016/6/1/11826256/mary-meeker-2016-internet-trends-report

http://www.wired.co.uk/article/inside-facebook-messenger

http://techcrunch.com/2016/04/12/agents-on-messenger/

http://dangrover.com/blog/2016/04/20/bots-wont-replace-apps.html

https://marco.org/2016/05/21/avoiding-blackberrys-fate

https://stratechery.com/2016/googles-go-to-market-gap/