MOBILE MESSAGING APPSDigital Intimacy Attracts Users, Challenges Marketers

JUNE 2014

Cathy Boyle

Contributors: Christine Bittar, Rimma Kats, Chris Keating, Monica Peart

Read this on eMarketer for iPad

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CONTENTS2 Executive Summary

3 Messaging Breaks Free from Wireless Carriers

8 Chatterboxes in the US: Why and How They Use Messaging Apps

10 Marketing via Chat Apps

14 eMarketer Interviews

15 Related eMarketer Reports

15 Related Links

15 Editorial and Production Contributors

EXECUTIVE SUMMARY

Mobile messaging apps elbowed their way

past games and social networks to become the

fastest-growing app category among smartphone

users worldwide, according to a 2013 analysis

by mobile analytics firm Flurry. However, the

conversational nature of these apps makes them

tricky places for brands to infiltrate.

Mobile messaging apps, also referred to as chat, instant messaging (IM), social messaging and over-the-top (OTT) apps, are, fundamentally, utilities: They are a means of communicating instantly and directly with peers on a one-to-one or one-to-several level. Messaging apps differ from traditional social networks in that they are a medium for intimate and immediate exchanges between two (or a few) close contacts. Those exchanges can take the form of text, pictures, videos or voice.

The private and, in some cases, fleeting nature of the mobile messaging environment raises unique challenges for marketers looking to engage consumers with branded content or advertising. Knowing which apps are gaining the most traction is important, as is understanding why and how consumers use these apps. This report will provide insight into these areas and give examples of how brands are leveraging chat apps to achieve their marketing goals.

For clarity, this report does not cover dating apps with chat functionality or traditional social media apps with built-in messaging features, such as Twitter and Instagram. However, Facebook Messenger, which is available as a separate app and which Facebook plans to unbundle from its core social networking app, is included because its main functionality is messaging.

KEY QUESTIONS ■ What are the leading mobile messaging apps

worldwide and in the US?

■ What motivates mobile users to use

messaging apps?

■ What marketing opportunities do these apps

offer brands?

% change vs. prior year

Usage Growth Rate for Mobile Messaging Apps vs.Total Mobile Apps Worldwide, 2013

Messaging apps

316%

Total mobile apps

115%

Note: based on growth of usage sessions, defined as a user launching andusing an appSource: Flurry, "The Age of Living Mobile," April 22, 2014173257 www.eMarketer.com

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MESSAGING BREAKS FREE FROM WIRELESS CARRIERS

With a smartphone in hand and a mobile messaging

app on deck, consumers no longer need to rely on

wireless carriers’ SMS or MMS to shoot a private text

message, picture or video to the phone of a friend or

family member.

The use of mobile messaging apps is far greater than it was 18 months ago. An analysis released by Flurry in April 2014 showed the use of messaging apps worldwide increased 316% between year-end 2012 and year-end 2013. “Use,” according to a January 2014 post on Flurry’s blog, was “a consumer launching an app and recording what Flurry defines as a session.”

A long and growing list of OTT messaging apps, which transmit private one-to-one (or one-to-several) messages via data connections and the mobile web, are drawing consumers away from carrier-controlled SMS and MMS. The shift in behavior is expected to take a sizeable toll on mobile messaging revenues, which are mainly driven by SMS and MMS fees (although carriers can be expected to recoup some of these losses through an increase in data revenues).

Portio Research estimates messaging revenue worldwide will peak at $239.7 billion in 2015 and then decline 1% in 2016 and another 4% in 2017, to $227.1 billion. The research firm expects North America will be a year ahead of the worldwide curve, with messaging revenue peaking this year and declining in 2015.

As SMS traffic declines, the volume of traffic from messaging apps is expected to increase dramatically. By 2018, Juniper Research estimates instant messaging apps will comprise 75% of mobile messaging traffic worldwide but just 2% of the messaging revenue. Juniper’s definition of “other mobile messaging” traffic, which is expected to comprise one-quarter of the total traffic volume and nearly all of the messaging revenue generated in 2018, includes SMS, MMS, RCS/RCS-e (a messaging service offered primarily by wireless carriers in Europe), email and social messaging (posting messages or uploading photo/video content to social networks like Facebook and microblogging via services such as Twitter).

Mobile messagingtraffic share

Mobile messagingrevenue share

% of total

Instant Messaging App Share of Mobile MessagingTraffic and Revenues Worldwide, 2018

Note: total messaging market includes instant messaging, MMS, mobile email, RCS/RCS-e (rich communications suite), SMS and social messaging; *63 trillion messages; **$3 billion in revenuesSource: Juniper Research, "Mobile Messaging Markets: IM, Social, SMS,MMS, Email, RCS/RCS-e 2014-2018" as cited in press release, Feb 18, 2014169689 www.eMarketer.com

IM apps* 75%

Othermobile

messaging25%

IM apps**2%

Other mobile messaging98%

Unlike wireless carriers, which profit directly from the transmission of messages, the most profitable chat app developers use messaging as a loss leader. In other words, free messaging is the carrot that draws consumers into a money-making machine that is typically fueled by gaming platforms, in-app purchases, paid content, advertising, and, in some cases, mobile payments.

LEADING MESSAGING APPS WORLDWIDE Three metrics—number of downloads, revenue generated and number of active users—determine the leading messaging apps worldwide. WhatsApp, LINE and Skype ranked high in a number of indices.

The three chat apps were included among the 10 most downloaded apps of 2013 and the top 10 revenue-generating apps of the year, according to the “App Annie Index: 2013 Retrospective” report. Note that App Annie, which is an app tracking and analytics firm, reported two types of download and revenue rankings for 2013, one specifically for game apps and the other for nongame apps. Messaging apps were among the latter.

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WhatsApp, Skype and LINE also appeared in several of the Top 10 lists published in the “2013 Year in Review” report released in December 2013 by Distimo, a competing app analytics firm that was acquired by App Annie on May 28, 2014. WhatsApp was among the apps that generated the highest number of downloads in both major app stores last year (No. 1 paid app in Apple’s App Store [WhatsApp changed to a free app in July 2013] and No. 2 free app in Google Play). Skype ranked third among the free apps that generated the most downloads in Google Play last year and LINE ranked third among the top grossing apps in Google Play.

In the race to generate revenue, a clear winner emerged. LINE accounted for nearly 60% of the revenue produced worldwide by 12 of the leading mobile messaging apps in Apple’s App Store and 69% of the revenue generated by the same set of apps in Google Play. LINE’s revenue comes primarily through its gaming platform, in-app purchases and marketing services.

% of total

App Revenue Share of Select Android and iOS MobileMessaging Apps Worldwide, 2013

Android iOS

LINE 69% 56%

KakaoTalk 20% 2%

WhatsApp 10% 17%

Tango 0.3% 0.7%

Viber 0.6% 1.4%

Kik Messenger 0.1% 0.3%

WeChat 0.1% 1.0%

Skype - 21.0%

Note: reflects activity among selected apps only; numbers may not add upto 100% due to roundingSource: Distimo, May 2014173571 www.eMarketer.com

A comparison of the 12 messaging apps also showed Apple and Android users have different app preferences. Of the 12 messaging apps Distimo analyzed, Snapchat generated the largest share of downloads among iOS users worldwide last year and WhatsApp was installed the most by Android users globally. One likely reason Android users gravitated more toward a text-based messaging app like WhatsApp as opposed to a photo-centric messaging app like Snapchat: Android devices don’t have a built-in equivalent to iMessage, Apple’s OTT messaging service that comes standard in the Messages app on Apple devices.

% of total

Install/Download Share of Select Android and iOSMobile Messaging Apps Worldwide, 2013

Android iOS

WhatsApp 21.0% 13.0%

Facebook Messenger 17.0% 13.0%

Skype 16.0% 12.0%

LINE 12.0% 8.0%

Viber 9.0% 9.0%

WeChat 7.0% 8.0%

Tango 6.0% 6.0%

KakaoTalk 5.0% 2.0%

Snapchat 4.0% 17.0%

Kik Messenger 3.0% 7.0%

BlackBerry Messenger (BBM) 1.3% 2.0%

Google Hangouts 0.3% 2.0%

Note: reflects activity among selected apps only; numbers may not add upto 100% due to roundingSource: Distimo, May 2014173569 www.eMarketer.com

The difference in metrics for “downloads” between Apple and Google Play is worth noting. As Christel Schoger, data analyst for Distimo, explained it, “In the Apple App Store, a ‘download’ of an app is based on the user (directly linked to the Apple ID), which means, when you download an app on your iPhone and on your iPad, this will only be considered as one ‘user install.’ For Google Play, the ‘download’ of an app by the same user on an Android phone and on an Android tablet will be considered as two ‘device installs.’ Typically, the device installs will be 1.3 to 1.5 times higher than the equivalent user installs.”

The differing metrics, Schoger added, have a significant influence when directly comparing Apple and Google Play download volumes. However, the metrics make no difference when comparing the market share of the leading apps within each store, as the App Store and Google Play provide market share figures independently.

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Of course, downloads are just the first step toward success. Regular usage by a large audience ultimately decides the fate of any app. The number of monthly active users also provides another means of comparing the field of messaging app players. Using this measure, the same apps that appeared on the Top 10 download and revenue lists rise to the top of the active user list, but in a slightly different order.

WhatsApp: 500 million monthly active users worldwide (April 22, 2014, source: WhatsApp)

WeChat: 396 million monthly active users worldwide (May 14, 2014, source: Tencent)

Facebook Messenger: Approximately 200 million monthly active users worldwide (April 23, 2014, source: Facebook)

LINE: 175 million monthly active users worldwide (April 21, 2014, source: BNP Paribas as cited in The Wall Street Journal)

Viber: 100 million monthly active users worldwide (February 14, 2014, Source: Rakuten)

Several apps likely to be among the leaders—namely, Skype (mobile), Google+ Hangouts and Apple iMessage—have not recently disclosed the number of monthly active users of their services.

REGIONAL DOMINANCE The stars on the world stage aren’t necessarily common or known everywhere. A significant degree of regional dominance exists among messaging apps, although that is quickly changing.

Take the messaging app LINE, which launched in Japan in 2011. More than one-third of social network users in Japan (34.8%) surveyed in March 2014 by japan.internet.com and NTTCom Research said they considered LINE to be their primary social network, surpassing the percentage that pointed to Facebook (28.5%) and Twitter (21.1%).

According to a Nielsen//NetRatings study released in December 2013, LINE was used by the largest number of smartphone app users in Japan, once again outpacing Facebook and also multiple apps from Google. LINE also attracted significantly more new users between April and October 2013 than apps from the two mobile giants.

millions and % change vs. April 2013

Top 10 Smartphone Apps in Japan, Ranked by AverageMonthly Users, Oct 2013

% change vs.April 2013

1. LINE 30%

2. Google Play 20%

3. Google Maps 14%

4. Facebook 5%

5. Google Search 22%

6. Gmail 18%

7. YouTube 11%

8. McDonald's 22%

9. Twitter 19%

10. Yahoo Japan

Average monthlyusers (millions)

21.2

18.8

15.8

15.4

15.2

14.5

11.4

10.8

9.4

6.4 45%

Source: Nielsen//NetRatings, "Tops of 2013: Digital in Japan" as cited inpress release, Dec 25, 2013172259 www.eMarketer.com

In an April 2014 blog post, LINE reported its app passed the milestone of 10 million registered users in 10 countries, including the US, Korea, Malaysia and Mexico. However, findings from several research firms suggest LINE has a ways to go before it becomes as popular in other countries as it is in Japan.

The same holds true for China’s two leading mobile chat apps, WeChat (Weixin) and Mobile QQ. According to Q3 2013 data released by Analysys International Enfodesk, Mobile QQ and WeChat comprise 77.3% of the IM/chat apps market in China. They have yet to attract such a large audience outside of China.

% of total

Mobile IM/Chat Apps in China, Ranked by MarketShare of Accounts, Q3 2013

Mobile QQ47.0%

Weixin (WeChat)30.3%

Mobile Feixin10.9%

Mobile MSN3.5%

Yixin2.1%

Wangxin2.0%

Mi Liao1.1%

LINE1.0%

Other2.1%

Note: includes active and non-active usersSource: Analysys International Enfodesk, "China Mobile IM Market Q3 2013Report" as cited in press release, Nov 26, 2013170596 www.eMarketer.com

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Internationally, the messaging app landscape remains fragmented. However, multiple sources suggest smartphone users in several countries have begun to gravitate toward WhatsApp more so than other apps:

■ An online survey conducted by Asociación para la

Investigación de Medios de Comunicación (AIMC) –

Spain between October and December 2013 found

80.4% of internet users in Spain used WhatsApp for

instant messaging, which far exceeded the number

who used Facebook Messenger (53.3%), Skype

(39.6%) or LINE (23.8%).

■ An August 2013 survey conducted for Acision by

Convergencia Research found the largest share

of smartphone users in Mexico (84%) used

WhatsApp compared with Facebook Messenger

(70%), Skype Messenger (24%), WeChat (10%) or

LINE Messenger (9%).

■ Data from Nielsen Informate Mobile Insights

showed nearly all smartphone users (96%) in

India used messaging apps in June 2013 and

WhatsApp was by far the app of choice. Mobile

metering technology used across Android,

iOS, RIM and Symbian operating systems

showed 83% of smartphone users in India used

WhatsApp while just under half used WeChat

(49%) or Google Hangouts (46%). Just 27% used

Facebook Messenger.

WhatsApp’s triple-digit growth in users worldwide goes a long way toward explaining Facebook’s keen interest and eyebrow-raising bid to acquire the app. Figures from GlobalWedIndex show WhatsApp experienced tremendous growth in every geographic region and the chat app has attracted a particularly large audience in Asia-Pacific, where Facebook has struggled to compete with locally grown social networks and messaging apps.

millions and % change vs. prior yearWhatsApp Users Worldwide, by Region, 2013

Asia-Pacific 101 (189%)

Europe 45 (152%)

Latin America38 (186%)

Middle East & Africa15 (120%)

North America7 (230%)

Worldwide 206 (175%)

Note: ages 16-64; actively used in the past monthSource: GlobalWebIndex as cited in company blog, Feb 20, 2014169836 www.eMarketer.com

Interestingly, WhatsApp’s North American audience is the smallest compared with other parts of the world. GlobalWebIndex pinned it at 7 million, half the size of the app’s audience in the Middle East and Africa and less than one-tenth the size of its audience in Asia-Pacific. The lack of widespread enthusiasm in North America, particularly the US, is not necessarily a reflection on WhatsApp, however.

What’s Up with the US? (Not WhatsApp—Yet) US smartphone users as a whole have been slow to adopt mobile messaging apps. For Simon Khalaf, president and CEO of Flurry, that sluggishness is not surprising considering mobile users in the US were also slow to adopt text messaging. The economics of wireless plans outside the US tend to drive users toward nonvoice communication services, he said. Using Europe as a comparison, Khalaf noted voice calling is cheaper in the US. “People pick up the phone and call whereas in Europe data is cheaper than voice so they tend to text [and message] more often.”

With comparatively less pressure to move away from voice calling and data plan fees on the rise, the adoption of mobile messaging has been more gradual in the US compared with other countries. A July 2013 survey conducted by Ipsos MORI on behalf of Deloitte showed US smartphone users ranked far behind their counterparts in most mature countries with respect to use of mobile messaging services. Just 23% of US smartphone users polled said they used mobile IM services, which was also far lower than the shares in the developing countries surveyed.

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% of respondents

Smartphone Users in Mature vs. Developing CountriesWho Use Mobile Instant Messaging, July 2013

Mature countries

Spain 83%

Singapore 76%

South Korea 67%

Netherlands 67%

Germany 43%

Portugal 34%

Japan 32%

UK 30%

Finland 30%

US 23%

Belgium 20%

France 15%

Developing countries

Indonesia 79%

Mexico 78%

Argentina 78%

India 74%

China 59%

Turkey 56%

Brazil 43%

Russia 28%

Note: in the past seven daysSource: Deloitte, "The State of the Global Mobile Consumer 2013:Divergence Deepens" conducted by Ipsos MORI, Nov 20, 2013167275 www.eMarketer.com

More recent data from comScore, cited in the “Messaging Apps: The New Face of Social Media and What It Means for Brands” white paper published by IPG Media Lab, showed slightly less than one-third of US mobile users (31%) used mobile IM services in Q4 2013. According to eMarketer estimates, that would translate to roughly 62 million “chatterboxes” (smartphone and tablet users who use an instant messenger service) in the US.

Although a minority group, the rising number of US mobile messaging users was certainly one of the forces driving the triple-digit increase noted by Flurry in messaging app usage worldwide. Like their global counterparts, US mobile users are sampling a wide range of apps.

An analysis of app store data on the leading chat apps conducted by Distimo showed Snapchat, Facebook Messenger and Kik Messenger attracted the largest shares of downloads last year among iOS users in the US. Meanwhile, Android users in the US exhibited slightly different preferences. Facebook Messenger, Skype and Kik Messenger generated the largest shares of installs among that set in 2013.

% of total

Install/Download Share of Select Android and iOSMobile Messaging Apps in the US, 2013

Android iOS

Facebook Messenger 22.0% 15.0%

Skype 18.0% 11.0%

Kik Messenger 14.0% 13.0%

Snapchat 13.0% 27.0%

Tango 13.0% 7.0%

WhatsApp 9.0% 8.0%

Viber 4.0% 8.0%

LINE 3.0% 3.0%

WeChat 1.5% 2.0%

BlackBerry Messenger (BBM) 0.7% 2.0%

KakaoTalk 1.0% 1.0%

Google Hangouts 0.4% 3.0%

Note: reflects activity among selected apps only; numbers may not add upto 100% due to roundingSource: Distimo, May 1, 2014173570 www.eMarketer.com

With the explosive growth of mobile messaging apps during the last year, characterizing the field of players as being in a state of flux is an understatement. While download data provides insight into app preferences over a given time, such figures are imperfect indicators of which app will succeed at building the largest base of active users.

At this point in time, marketers interested in engaging US mobile users within chat apps would be best served by partnering with the apps that offer features and services that align with the brand image and objectives, rather than trying to pin down the leader. Lessons learned from marketing in any one of these chat apps will likely apply to marketing in the leading chat app, once one emerges.

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CHATTERBOXES IN THE US: WHY AND HOW THEY USE MESSAGING APPS

The assumption that younger mobile users are

leading the charge toward chat apps is true, to a

point. But as the population of mobile messaging

users grew larger during the last 18 months, it

also diversified in age. Motivations for usage also

became clearer.

Broadly speaking, US mobile messaging users are drawn to chat apps less for the cost-savings benefits they offer (vs. SMS/MMS) and more for the immediate, private and fun nature of the messaging environment.

“People are looking for a simple, quick way to connect with each other in a private way and messengers like Kik are that mechanism,” said Heather Galt, head of marketing for mobile messaging app Kik. “Whether it [the message] is for a functional purpose like, ‘Hey, I’m late,’ or whether it’s for fun, you’re going to catch people right away.”

Creativity also comes into play when choosing which chat app to use, particularly among younger users. Features that let consumers personalize their messages are a strong draw for college students, according to Ben Kosinski, founder of Sumpto, a company that rewards college students based on the level of social influence they have among their peers. “With Snapchat, for example, you can type in text with a picture; you can draw a funny caption; you can make pictures; you can even switch from text to video,” Kosinski said.

The immediate one-to-one (or one-to-few) nature of the message delivery also provides instant gratification. Kosinski contends that because consumers’ digital lives are saturated with content, there is a heightened desire to know people are listening. Chat apps, he said, offer that reassurance more so than traditional social networks. “If you post something on Facebook, Twitter, Instagram, Vine, you don’t know who’s read it, who’s seen it or who’s opened it. You’re basically throwing a ball out to the crowd and hoping that people will catch it,” Kosinski said. “Whereas Snapchat has immediate gratification built into it. If you send a snap to a user, you can see if they’ve opened it or not, and they’re going to reply directly to the message.”

These qualities of communication—immediacy, privacy and fun—are bound to appeal to a broad spectrum of consumers. So, as word of mobile messaging apps’ qualities and benefits spreads beyond earlier adopters, the population of users is diversifying.

THEY’RE NOT ALL YOUNG As one would guess, teens and young adults were the first drawn to mobile chat apps. As Facebook evolved into “Mombook,” chat apps filled a void by providing young mobile users with a space to interact freely with friends. For these users, chat apps are a more private area where they can share thoughts, feelings and experiences without exposing themselves to opinions or judgments of parents, educators, classmates or acquaintances who are their “friends” on Facebook.

Edwin Wong, senior director of business-to-business insights for Yahoo, studied the digital habits of generation Y and Z (those under the age of 22) in collaboration with brand and content strategy firm Audience Theory. He found the younger cohort of consumers talked about their experiences with traditional media and chat apps very differently. “More traditional social platforms are about connecting more broadly with communities—sharing content with kids in class, friends and family, or even people you don’t know but that you want a connection to, like celebrities,” Wong said.

By contrast, Wong learned that chat apps were about sharing moments that matter with the small group of people that matter most. “Kids told us there are some things that they simply don’t want shared with everyone they know or are connected to. There are some things they want kept just between their closest circle of friends, and much of that is really about sharing what inspires them.” Wong said. The desire for digital intimacy emerged as a powerful motivator for this younger cohort of consumers and Wong’s research suggests it’s a driving force behind the growth of chat apps.

Most agree that teens and young adults are fueling the growth of mobile messaging apps, but the average age of chat app users is ticking upward as the population of users increases. “The 13-to-24 group is the one that overindexes [in usage],” said Flurry’s Khalaf. However, as the adoption of these apps has expanded, the population has diversified, Khalaf added. “If you do a rollback over the last three years, you definitely see the audience is maturing.”

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Even a year ago, that maturation was evident. Research conducted in June 2013 by Informate Mobile Intelligence showed roughly three out of four US smartphone chat app users were 25 or older and the rest were between the ages of 15 and 24.

Gender Age

% of total

Demographic Profile of US Smartphone Chat App Users, June 2013

Female68%

Male32%

15-2426%

25+74%

Source: Informate Mobile Intelligence, "Smartphone Insights" as cited inpress release; eMarketer calculations, Aug 22, 2013167056 www.eMarketer.com

The “personality” of each app influences the composition of the audience. For example, it’s widely believed Snapchat’s audience is dominated by teens drawn to the fleeting nature of the app’s messaging style whereas BlackBerry Messenger’s (BBM) reputation as a work-centric messaging service attracts a slightly older crowd. “In markets where BlackBerry historically has been a stronger enterprise or corporate focus proposition, the [BBM] audience skews a little bit older and a little bit male,” said David Proulx, senior director of BBM business development.

Given chat apps are communication tools at the core, the user base is expected to diversify over time and ultimately become as demographically diversified as the population of text messaging and social network users.

THEY’RE MORE LIKELY TO CHAT THAN TWEETLooking at the total time spent using apps and mobile browsers on iOS and Android devices in the US, Flurry estimates nearly 1 in 10 mobile minutes was spent using social messaging apps between January and March 2014. Flurry based these estimates on app metrics from its platform and browser metrics from comScore and Net Marketshare. Narrowing the focus to just app usage during the same three-month period, Flurry found the share of time spent using mobile messaging apps was nine times that spent using the Twitter app and more than twice that spent using the YouTube app.

However, Galt pointed out time spent in chat apps is difficult to measure accurately. “Instant messaging users don’t necessarily sit and spend hours at a time [in the app]. It’s not like playing games, and it’s not like scrolling through Twitter, Tumblr or Instagram, where you might measure how long people stay on the app,” Galt said. Roughly 70% of Kik’s users are in the US, she added, and in general users tend to leave the app running in the background, so when messages come in, the user is immediately notified. “Conversation tends to be [just] one of the things they’re doing as opposed to the only thing they’re doing. We know that users multitask—they jump in and out and back in—so it’s difficult to measure exactly how long users are in the app.”

On the whole, US smartphone users frequently juggle multiple communication channels on their phones. For example, a November 2013 On Device Research survey of US Android and iOS users showed a near-equal majority of respondents used four communication channels on their phone on a daily basis—phone (75%), SMS (71%), email (69%) and social messaging apps (72%). It’s worth noting that social messaging apps in the On Device Research study included Twitter, which is likely one reason why the percentage of messaging users was higher than other research findings mentioned previously in this report.

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Of the four channels noted in the On Device Research study, social messaging apps were used the most frequently. Nearly half of the US respondents to the On Device poll said they used social messaging apps more than 10 times per day, which was slightly higher than the share that used SMS with such frequency and significantly higher than the groups that made voice calls and used mobile email more than 10 times per day.

% of respondents

Methods of Staying in Touch via SmartphoneAccording to US Smartphone Users, by Frequency,Nov 2013

Voice calls

Social messaging apps

SMS

Email

Oncea day

11%

8%

6%

13%

2-3 timesa day

35%

18%

21%

27%

10+ timesa day

29%

46%

44%

29%

Total

75%

72%

71%

69%

Note: Android and iOS smartphone usersSource: On Device Research, "Messenger Wars: How Facebook lost itslead," Nov 28, 2013166590 www.eMarketer.com

With regard to when chat apps are most often used, spikes typically occur after hours and on weekends. “We tend to see a lot of our users on Kik when it’s social time. They’ll be on Kik when school’s out. They’ll be on Kik on the weekends when they’re socializing with their friends,” said Galt. Jen Donahoe, head of marketing and partner relations for mobile messaging app Tango, reported a similar pattern of usage: “We see peak times in the morning and evenings. And, weekend use is huge. Friday, Saturday and Sunday are our peak times.”

All that messaging activity is unlikely to occur in a single messaging app, however. On average, US smartphone users have 2.1 messaging apps installed on their phone, according to the On Device Research survey. The reason is simple: Different friends use different apps. In On Device’s poll, 57% of respondents said they used a variety of chat apps because their friends are spread out. Given the fragmented nature of the chat app landscape in the US, this finding is not surprising. Nor is the finding that 42% of respondents used a variety of apps because of special features offered.

Over the next 18 months, as mobile chatting spreads further beyond early adopters to the larger mobile audience and a clear leader of the US market emerges, the need to toggle between apps to find different friends will diminish.

MARKETING VIA CHAT APPS

A new set of media properties with more than

100 million active users is inherently interesting to

marketers. Yet the conversational nature of chat apps

has made them difficult places for brands to infiltrate.

The “no advertising” or “no traditional advertising”

stance taken by some popular chat apps certainly

hasn’t helped. Still, the speed at which this category

of apps is growing is motivating some brands

to experiment.

It is early days in the evolution of chat app marketing but advances are being made quickly across multiple areas, particularly content marketing, sponsorships and native advertising. And some big brands have been eager to jump into the chat app space to connect with the early adopter audience and to be perceived as trendsetters themselves.

Following are examples of marketing tactics used in several leading chat apps. While most brand marketers are quick to point out their efforts are experimental, the insight into their experiences underscores how marketing within chat apps differs from marketing on other platforms.

CONTENT MARKETING McDonald’s, PepsiCo, Taco Bell and fashion designer Rebecca Minkoff are some of the brands that have sparked conversations on messaging apps through the distribution of custom content. McDonald’s and PepsiCo chose WeChat for two recent campaigns and the goal for both companies was to raise brand awareness among WeChat’s large audience base in China.

According to a February 28, 2014 Ad Age article, PepsiCo created a soundtrack for people to send friends their good wishes for the Chinese New Year. Through the WeChat app, users could record a voice message to mix into the PepsiCo soundtrack. They could also personalize the song in other ways with various sound effects provided by the brand.

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McDonald’s similarly leveraged the voice capabilities of the WeChat app, according to the Ad Age article. The fast food brand ran a contest asking WeChat users to record and share their best “Big Mac Rap” performed as the host of China’s hit singing show, “The Voice of China,” might sing it.

In both cases, the brands understood the users were in the WeChat app to communicate and they provided value to the users by giving them something more to talk about with their friends and family. In other words, they enhanced the experience of the app.

Rebecca Minkoff took a different tact on Snapchat. Instead of creating shareable content, the fashion designer wanted to create buzz about its Spring 2014 collection by providing a passing glance at some of the new styles that were to debut during Mercedes-Benz Fashion Week New York.

“Giving access to something that’s fleeting is a great way to engage our community and energize a microgroup of ardent supporters,” said Uri Minkoff, CEO of Rebecca Minkoff.

The transient nature of content on Snapchat is also what drew Taco Bell to the app. “Our first snap ever was letting people know that the Beefy Crunch Burrito was going to be back on a certain date,” said Nick Tran, social media lead at Taco Bell. “That product had a cult following and we knew the best way to give this limited-time offering a spotlight was to provide this limited-time message via Snapchat.”

But it’s the intimate nature of the app that brought Taco Bell back for more. “Once we started working in the platform, we recognized that it was a way for users to feel like they were a friend to the brand,” Tran said. “Rather than it being a public-facing platform like other [social] ones that we’ve used, it’s a one-to-one message in most cases.”

To engage with fans in the way that fits the chat environment, Taco Bell launched Snapchat Fridays. “Every Friday we would release snaps and then let our friends on the platform know that if they sent us a snap, we would snap them back,” Tran said. Then, after the launch of the Snapchat Stories feature, Taco Bell began sharing stories in a broadcast fashion to a larger fan base.

With some experience under their belts, the brand marketers and digital agency executives consulted for this report had the following insights to share about content marketing within mobile messaging apps.

Traditional social media is a valuable launch vehicle for chat app campaigns: “Between Twitter, Facebook and Instagram, we probably have north of 900,000 people that have engaged with us. So those platforms were a good announcement vehicle to drive people to our new Snapchat experience,” said Minkoff.

The unique environment demands a unique content strategy: “These new platforms are a whole new breed of community platforms that require a new strategy,” said Ron Peterson, general manager of digital agency AKQA. “They require a new way of thinking and a new way of approaching [users]—you have to be even more delicate in terms of intruding into their conversations.”

An “and” not “or” mindset is needed: “We have different fans on different platforms. At times we share news with all of our fans and friends across all the platforms,” Tran said. “Facebook is a broad-reach play and Twitter is about that quick, witty engagement where people can tweet to Taco Bell and we are able to create a sort of conversation. Snapchat extends that relationship further and provides the ability to do images, video, text, as well as drawings or doodles,” he added.

Sometimes brands have to pay to play: “With a lot of these mobile messaging services you have to post on a platform and you can only send a few messages per month,” said Peterson. “For instance with LINE, you have to pay for every message that you typically send out to your audience base. That really changes the game for brands in the social space. Whereas in Facebook you can post as much as you want, LINE makes a barrier where you have to pay every time you’re going to want to reach your audience. So you want to make sure that the message is really sharp and it’s going to resonate with your users.”

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STICKER SPONSORSHIPS Mobile messaging app users, particularly those who have WeChat, KakaoTalk or LINE on their phone, converse in a visual language based on “stickers”—imagery that is far more sophisticated than emoticons or emoji, the preset pictographs that can be added to text messages.

LINE has generated significant revenue by selling sticker packages directly to its growing user base. Part of that revenue comes from sponsored stickers, which are stickers created by a brand. The sponsored stickers can either be offered free to LINE users (in that case the brand pays LINE a fee to distribute the stickers) or they can be sold in LINE’s sticker shop, with a percentage of the sales going to LINE. Sir Paul McCartney released eight stickers on LINE, each selling for $1.90.

“What LINE has been doing is rather than coming up with another banner ad [model], they’re saying ‘help us create a new sticker pack; you can distribute that branded sticker pack, but we’ll charge you for it,’” said AKQA’s Peterson. “It’s a completely different model and the success of LINE has been predicated on these sticker packs,” Peterson said.

In August 2013, LINE announced it earned $10 million per month from stickers. The company did not disclose what portion of its $143 million in Q1 2014 revenue came from its sticker business.

BlackBerry was so impressed with the revenue-generating power of stickers, it launched its own sticker packs in April 2014. These are available in the new BBM Shop. “Stickers are one opportunity for marketers to introduce their brand directly into the messaging experience,” said BlackBerry’s Proulx. “It’s probably the most intimate engagement opportunity because [stickers are] brought in at the users’ election and they’re then directed out from the user to their social graph of contacts inside BBM.”

Brands looking to engage BBM users can sponsor stickers in much the same way as they can on LINE. “The packs are either sold a la carte, or they are free of charge at the discretion of the content owner or marketer,” Proulx said. “In some cases, there is a publishing fee between us and the content owner.” The WWE was among the first brands to introduce limited-edition stickers on BBM just prior to WrestleMania XXX on April 6, 2014.

At this point, stickers are far more popular among mobile messaging users internationally, particularly those in Asia-Pacific. Whether US consumers will flock to stickers as enthusiastically as their international counterparts remains to be seen. But it’s clear stickers are proving to be a less intrusive means of engaging consumers in mobile messaging apps.

The brand and digital agency executives consulted for this report had the following insights to share regarding sticker marketing.

The most effective sponsored stickers convey emotions: “If a marketer is going to utilize stickers, they need to think about how their brand identity is translating in a way that is communicative, emotive and relevant to the chat experience,” said Proulx. “You can’t think, ‘How do I exploit that impression to present my logo or present my iconography?’”

Speak and expand the chat language: “If consumers are speaking in a specific way in WeChat or on LINE, or if they’re using emojis [stickers], we can help create a new language or help add more characters so they can speak their language better,” said Peterson. “The No. 1 best practice is to find a way to not just talk at our consumers but make their [chat] experiences better. That’s the fundamental learning that a lot of brands can take across these new platforms.”

DISPLAY ADVERTISING Serving banners or other traditional display ad formats within messaging apps poses several unique challenges. On a fundamental level, injecting an ad into a live conversation violates the basic tenets—intimacy and privacy—ascribed to by many apps in this new category. David Berkowitz, CMO at agency MRY, advises marketers to be very respectful of how consumers use these apps. Compared with posts sent to large groups on traditional social media apps, Berkowitz contends, “Consumers are more protective over private messaging and [more particular about] where they’ll welcome brand experiences.”

Likening the messaging environment to a bar setting, Peterson underscored how unwelcome a brand interruption can be to a conversation: “When you’re at a bar and you’re with your friends and having a drink, the last thing you want is a brand coming at you and selling something.”

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Audience targeting, which has been a challenge in mobile advertising in general, is even more difficult in chat apps. Again, the apps’ promises of privacy fly in the face of tracking behaviors and storing data for advertising purposes. Moreover, users have less of a need to maintain a detailed profile—valuable demographic insight for ad targeting—given messaging apps are less about discovering new friends and more about chatting with people they already know.

Lastly, the form factor of traditional display ads (banners and rich media) is not a natural fit for one-to-one messaging interfaces. This concerns some app developers. For example, Tango serves only native ad formats (ads that look like the message content). “We were really concerned about our user experience so we decided not to do traditional display,” said Tango’s Donahoe. Instead, “we chose to do a native ad integration so that the experience was as pleasant as possible to the consumers.” Following is an example of a native ad in the messages view of the Tango app.

The insight shared by marketers consulted for this report aligns with Tango’s thinking: For display advertising to work in a messaging environment, the form factor of a brand’s message needs to be tailored to the chat style. Also, given the newness of the environment, key performance indicators used in other channels may not apply or may be difficult to measure. Following are some insights shared by those experienced with paid advertising in the chat app environment.

Not all messaging apps are the same, know their audience: “Marketers need to look into whether their brand fits with the audience of the messaging app. Every one of these apps … has a special consumer base,” said Donahoe. She noted: “Tango is a very Western-oriented messaging app. A third of our audience is in the US. LINE, Kakao and WeChat are predominantly Eastern or Asian-oriented messaging apps. So some of what they do doesn’t necessarily translate as well to this [US] audience.”

Adopt a new philosophy: “It’s a mistake for brands to take the same philosophy, methodology and approach that they’ve taken with Facebook and Twitter, and other forms of advertising for that matter, and just replicate that towards LINE, WeChat, WhatsApp,” said AKQA’s Peterson.

Get comfortable with the analytics, or lack thereof: “When developers build a peer-to-peer messaging service, they’re not thinking about, ‘How do I provide the reporting a big brand advertiser expects when they do a mobile messaging campaign?’” said James Citron, president of messaging platform provider Outspoken. “So the No. 1 question that we get asked [by advertisers considering chat apps] is, ‘If I do insert my brand in that conversation, how do I actually track whether I’m getting the impressions, whether I’m getting the lift?’”

Experiment: “Chat apps offer prime environments to reach a captive audience, specifically the millennial set,” said Dale Carr, president and CEO of mobile ad network Leadbolt. “By participating in these popular apps with campaigns designed to fit, complement and play back the chat app etiquette and environment, brands have a unique opportunity to demonstrate their relevance in the lives of these consumers and relate to this highly coveted audience.”

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EMARKETER INTERVIEWS

Messaging Apps Bring Fun Back to Social Networking

Ben Kosinski Founder

Sumpto Interviewed conducted on May 9, 2104

Rebecca Minkoff Debuts Runway Collection on Snapchat

Uri Minkoff CEO

Rebecca Minkoff Interview conducted on May 6, 2014

BlackBerry Calls BBM Marketing ‘Branded Inbox Inside the Messaging Experience’

David Proulx Senior Director, BBM Business Development

BlackBerry Interview conducted on April 25, 2014

Got a Second? Juicy Couture on Branding Efforts via Snapchat

Michelle Ryan Vice President, Global Digital and Social Strategy

Juicy Couture Interview conducted on May 8, 2014

Snapchat Grabs Attention of Karmaloop’s Young Shoppers Malcolm Gray Marketing Manager

Karmaloop Interview conducted on May 8, 2014

Kate Welton Affiliate Specialist

Karmaloop Interview conducted on May 8, 2014

Raj Aggarwal CEO

Localytics Interview conducted on April 25, 2014

David Berkowitz CMO

MRY Interview conducted on April 29, 2014

Dale Carr President and CEO

LeadBolt Interview conducted on April 28, 2014

James Citron President

Outspoken Interview conducted on April 25, 2014

Jen Donahoe Head of Marketing and Partner Relations

Tango Interview conducted on May 2, 2014

Mike Evans Founder

ChatAds Interview conducted on May 8, 2014

Simon Khalaf President and CEO

Flurry Interview conducted on April 25, 2014

Craig Palli Chief Strategy Officer

Fiksu Interview conducted on May 1, 2014

Ron Peterson General Manager

AKQA Interview conducted on May 2, 2014

Jeremy Sacco Manager, Content and Communications

Fiksu Interview conducted by on May 1, 2014

Marcos Sanchez Vice President, Global Corporate Communications

App Annie

Interview conducted on April 23, 2014

Christel Schoger Data Analyst

Distimo Interview conducted on May 1, 2014

MOBILE MESSAGING APPS: DIGITAL INTIMACY ATTRACTS USERS, CHALLENGES MARKETERS ©2014 EMARKETER INC. ALL RIGHTS RESERVED 15

Andy Shirey Senior Product Manager

OpenMarket Interview conducted on April 28, 2014

Len Shneyder Marketing Manager

OtherLevels Interview conducted on April 18, 2014

Nick Tran Social Media Lead

Taco Bell Interview conducted on May 6, 2014

Ryan Unger Co-founder and Chief Technology Officer

Punchkick Interview conducted on April 18, 2014

Edwin Wong Senior Director, B2B Insights

Yahoo Interview conducted on April 25, 2014

Rachel Youens Social Commerce Evangelist

Wanelo Interview conducted on May 9, 2014

Heather Galt Head, Marketing

Kik Interview conducted on May 12, 2014

RELATED EMARKETER REPORTS

Global Mobile Landscape 2014

Mobile Ad Targeting: After Years of ‘Spray and Pray,’ Signs of Sophistication Appear

Mobile App Marketing: 10 Tactics Used by Successful App Marketers

Social Media Advertising: Seven Trends for 2014

RELATED LINKS

Analysis International

App Annie

Asociación para la Investigación de Medios de Comunicación (AIMC)

comScore

Convergencia Research

Distimo

Facebook

Flurry

GlobalWebIndex

Informate Mobile Intelligence

Ipsos

IPG Media Lab

Juniper Research

LINE

Nielsen//NetRatings

NTTCom Research

On Device Research

Portio Research

Rakuten

Tencent

WhatsApp

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, ReportsBen Clague Chart Data SpecialistJoanne DiCamillo Senior Production ArtistNoah Elkin Executive EditorStephanie Meyer Senior Production ArtistDana Hill Director of ProductionKris Oser Deputy Editorial DirectorEzra Palmer Editorial DirectorHeather Price Copy EditorKatharine Ulrich Copy Editor

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