Chat App Market Challenge For Brands.

By Posted in - Marketing Advice & Insight on June 25th, 2015

By Yawen Li, Marketing Analyst APEC

Chat apps are beginning to challenge social networks as the most popular way to communicate and stay in touch. They are the future of social networking and probably the closest thing we have to a complete customer relationship management system for brands. Most major countries have a dominant player, with WhatsApp and Facebook Messenger holding a lead in many markets outside of Northern Asia, North America and the Middle East. Asia is monopolised by LINE in Japan, Taiwan and Thailand, Kakao in Korea, and Viber in multiple countries across the globe. WeChat is the super app power in China.

And this is significant because, over the next 10 years, many Chinese social media sites will shift their focus beyond the “great firewall” and enter overseas markets. The potential for UK brands to build a community and engage with consumers is huge, if not without ‘cultural’ challenges, and it starts with WeChat, China’s dominant messaging service, and one that has largely step into the void that Facebook could have filled were it accessible in China.

The Internet has been filtered in China since 1997 to prevent non-Chinese organisations or governments from sharing political messages with Chinese citizens. Sites come and go. Facebook, Google, Instagram, and Twitter are all censored, but Amazon, LinkedIn, Wikipedia and WhatsApp are not.
WeChat, called Wēixìn in China, however, is causing the most excitement among marketers, largely because after chat apps acquired their huge customer base – the top 10 chat apps driving this shift have acquired over 2 billion users – they began exploring ways to monetise, initially by selling virtual goods like games and stickers (e.g., emoticons). Now, messaging apps, like WeChat, are moving into new, innovative sources of revenue while looking for ways to solidify their position in their core markets.

Many chat apps are allowing brands to have a presence on their platforms by way of Official Business Accounts (“Official Accounts”) to drive new revenue by delivering tangible user benefits while creating user stickiness. These official account services offer global brands the opportunity to engage one-on-one, in a genuine and intimate manner, with consumers via mobile marketing, e-commerce sales, and customer support, all in a single branded chat account.

WeChat is clearly the “Official Account” leader, with millions of businesses already launched on the WeChat platform in China. Every business, from airlines, to financial institutions, to retailers, to hotels & restaurants, have shifted away from branded apps to having their app integrated in WeChat.
It is the fifth largest online community in the world after Facebook, YouTube, QQ and WhatsApp. Launched in January 2011, WeChat has an estimated 600m active users and the number is growing year on year. The service is like Instagram and SnapChat. Users share messages with friends in their network and publish images and short videos called Moments to a timeline.

WeChat isn’t a retail channel but it is a payment platform. It has two partners on board:; the largest ecommerce platform by volume; and MeiLiShuo selling fashion and cosmetics to young women. The rapid growth of the service is thanks to simplicity of the platform in integrating online and offline, and social and commerce. China’s top three internet companies are jostling for pole position: Amazon-like service Alibaba; search firm Baidu; and Tencent, who own WeChat.

WeChat has steadily but carefully experimented with ad placement. In June 2014, it officially rolled out an ad platform that allowed official accounts with more than 100,000 followers to place banner ads at the bottom of posts written and pushed by the account itself. In January of this year, WeChat let selected big name brands like Mercedes test out advertising through WeChat moments, the app’s Timeline-esque social feed. WeChat’s foray into ads resembles that of Facebook, but unlike the most famous of social networks, WeChat has been conservative when it comes monetising from ads, and the company appears to be experimenting with a formula that’s not too obtrusive. WeChat has stressed the importance of user experience, and has given careful consideration to designing how and when to show ads in users’ news feeds. Ads will only appear if a user has a minimum of four new updates in their newsfeed – the ad will appear in the fifth spot, after four organic updates from contacts. The ad will automatically disappear after six hours if it doesn’t receive any likes or comments. An ad is active for seven days, and a WeChat user will only see one ad every 48 hours.

According to Chris Moore, Vice President, Chat App API Business, Nexmo, this is all about “consumer choice over their preferred channel. Consumers will choose their preferred chat app to communicate to brands and when that brand can communicate with them.” For example, I can choose my favourite store to view the shoes on sale today. I can then purchase a pair of shoes and receive delivery status alerts all in my chat app. If I have a problem with the purchase, I can immediately connect with customer service right within the chat app. No longer will I need to jump from one branded app to the next to make a purchase, then call on the phone when I have a problem with the purchase: all interactions are centralised in the chat app.

This rapidly evolving chat app market creates challenges for brands. Today, brands manage all online customer interactions in a central platform. Brands have a marketing cloud, a sales cloud, and a service cloud platform solution to manage all customer interactions over multiple communication channels. In order to include the new chat app channel in their central service platforms and reach their customers, globally, brands need to connect to WeChat, Line, Kakao, Kik, Facebook Messenger and the 150+ apps across the world. It’s a daunting task.

The brands who will succeed will be the ones to implement and scale communications across all chat apps. The number of new app connectivity requirements, changing APIs, business agreements, and legal team reviews alone can take months to get approval for. Not to mention, the ongoing monitoring and maintenance of Chat App APIs. The chat app world is quickly growing into a vast web of complexity. One way to solve this challenge is to centralise connectivity to the global chat apps and in the process simplify the process for brands to connect to their customers no matter where they are in the world.

For more info on how to advertise on WeChat, contact me.