Facebook turns Messenger into a customer service tool

31 Mar 2015 | Author: | No comments yet »

Facebook is building an incredible moat around the future of social with Messenger and WhatsApp.

Facebook announced this planned next step for the Messenger app Wednesday at its F8 conference. The social media giant is trying to mold its Messenger app into a more versatile communications channel as smartphones create new ways for people to connect with friends and businesses beyond the walls of the company’s ubiquitous social network.Many see messaging apps as the future of social: Lightweight, real-time, personal conversations that can become rich environments for media sharing, entertainment, and even commerce.Facebook’s Messenger app is evolving into a multitasking tool equipped to send an animated fist bump to a friend at one moment and then get a little business done in the next. When placing an order through a retailer that uses BoM, a shopper should receive confirmation and order updates in a single message thread in the app, rather than receiving multiple separate emails.

Facebook Messenger will immediately begin allowing users to download a slew of third-party apps and tools from partners like Pic Stitch, ESPN, and The Weather Channel. It has the potential to overhaul the dynamics of digital distribution, but Facebook’s own embryonic platform must to develop in a more open and useful way if it to have a shot at mainstream success.

Messenger will also be adding the ability to display store receipts and shipping information to help consumers keep track of their interactions with merchants and other businesses. It now owns the two largest messaging services in the world: No. 1, WhatsApp, which last said it had 700 million monthly active users, and was acquired by Facebook for more than $20 billion. Facebook hosted its F8 developer’s conference last week to outline its direction as well as unify the often-chaotic collection of apps and services it currently owns. “Facebook used to be this one blue app on your phone, and now Facebook is a family of apps,” Facebook’s CEO Mark Zuckerberg said while he ran down the global numbers of each of his company’s key products. Right now, those new features are mainly limited to more advanced messages, like text messages that turn into songs or one that lets you animate selfie photos. Thus the static online purchase procedure — almost universally a three-step process of select, check out, and pay — now promises to evolve into a conversation.

We don’t yet know what long-term implications the move will have, but some have already questioned whether the ecosystem can compete with the likes of iOS and Android. With that shift now starting to take place — among both younger and older demographics in Western markets, and beyond the more affluent consumers in emerging markets — mobile is now radically changing the way that the Internet is used. The push to plant more features in Messenger underscores the growing importance of apps that enable more intimate and direct conversations than social networks. What’s interesting is how the apps are starting to diverge: Two similar concepts with increasingly different feature sets, philosophies, and strengths. But the company announced tools for developers to build in even more capabilities, plus partnerships with stores, so that users can track online purchases and packages in Messenger.

Facebook’s instant messaging app Messenger boasts 600 million users, popular photo sharing app Instagram has 300 million users and Facebook itself boasts 1.4 billion users. Younger people, in particular, are increasingly using a wide range of mobile messaging apps to communicate while spending less time broadcasting their activities on Facebook’s more expansive social network. Facebook has been said to be working on attracting attention and wooing key developers to its platform, which could make the idea of competing with the two app giants not so far off in the future. Today, it is inherently a mobile-first model, to the point that many people don’t consider the apps on their phone — and primarily Facebook — to be part of the Internet. As users moved from accessing Facebook on websites to accessing the service on their mobile phones, the company struggled to make the shift to handsets.

With that backdrop, the ‘platformization’ of Facebook is designed with the aim of owning the smartphone Internet experience in a way that is unprecedented so far in the West. The model, in many ways, comes from the messaging giants popular in China and Japan: Tencent’s WeChat (known as Weixin in China), and Line, which became a powerful alternative to text messaging after the devastating Tohoku earthquake of 2011. “Facebook or these messenger apps, they’re wondering, what’s their future?” said Brian Blau, a research director at the technology research firm Gartner. “How are they going to engage?

While Facebook offered various apps on Android, iOS, webOS, Windows Phone and BlackBerry, it was a challenge to sustain the user experience across various devices, operating systems and screen sizes. The idea is similar to the old Facebook web platform from last decade, which fueled the growth of companies like Zynga, the gaming giant behind FarmVille, and Zong, an early Facebook mobile payments partner, whose founder David Marcus is now running Messenger for Facebook after a stint at PayPal. To begin with, there are only two retailers on board so far, though it’s too soon to tell how much momentum Businesses on Messenger stands to build among the retail community. Wouldn’t it be better if they were more of a platform and could have users in all sorts of areas and have businesses come to rely on them?” For users, beefier and more powerful messaging apps could be a logical extension of the activities they’re already doing — or the apps could quickly overwhelm.

Section 2.25 of the App Store Review Guidelines reads, “Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected.” The answer is, unfortunately for Apple, that Facebook and its array of incredibly popular products simply aren’t like other applications. The most striking example is in China, where WeChat, an app from billion-dollar Internet firm Tencent, has grown into the primary mobile Internet portal. For example, an ESPN app for Facebook Messenger allows you to send “sports GIFs to make your friends LOL.” Giphy, the “world’s largest GIF search engine,” adds support for fun animations. (Earlier this month, Facebook also added a feature that lets its Messenger users send each other money.) But it’s easy to see how something like this could expand. The clothing and apparel site Zulily is known for being cumbersome with shipping — with some items taking weeks to arrive. (Apparel retailer Everlane is also signed up for the service.) Messenger won’t necessarily clean up that act, in which case the experience could be less than optimal, giving a black eye to Facebook just as the new service gets off the ground.

Take a look at the numbers Facebook revealed at its developer conference a few days ago: 1.4 billion people use the core Facebook app; 700 million in Groups; 700 million in WhatsApp; 600 million in Messenger; 300 million in Instagram per month. That’s to say that, beyond text or video chats with friends, you can do all manner of things: book a taxi; read news; shop at e-commerce stores; order take-out; and pay bills. WeChat, which has some 500 million users worldwide, lets users make voice and video calls, communicate with groups of up to 500 people and send and receive money. Although BoM could potentially improve customer service, it won’t necessarily which means this could become just another portal for bad consumer experiences. Similarly, mobile games—notably missing from Facebook Messenger, so far—have propelled Japan’s most popular messaging app, Line, which has also struggled to catch on globally.

But the app also includes a complete payments platform, like Apple Pay or the coming Samsung Pay, that lets people check out in stores and restaurants using the app, and also shop online. But even if shoppers turn away in droves, it’s safe to say Facebook could win big in this space — at least before other digital giants try to copy their simple formula.

They can, for example, develop their own optimized Weixin sites, which is basically a website optimized for the messaging service with some native functionality. Facebook’s revenue last year surged 58 per cent to $12.5 billion (Dh45.8 billion), a performance that has enabled the company’s stock price to more than double from its initial public offering price of $38 in 2012. Now you can use WeChat to check into hotel rooms and use the app as a digital key, schedule doctor’s appointments and track prescriptions, buy train tickets, pay school tuition fees and order items for delivery. (The app Call a Chicken lets people order chicken dishes for delivery.) Tencent has also created its own games for WeChat and has licensed TV and movies to stream within the app. Similarly, Line handles messaging and voice, video games, mobile payments, TV shows and movie studios, ultrapopular stickers (that its users can create and sell on the platform), a taxi-calling service that rivals Uber and even a physical store in Tokyo. The challenge for Facebook will be growing and maintaining their family of apps while maintaining the level of user engagement across all these varied services.

A WhatsApp rep told Quartz that the company—which still runs independently, at an arm’s length from Facebook—is focused on app speed and reliability. That threat is propelling Messenger’s expansion and also prompted Zuckerberg to spend $22 billion last year to buy WhatsApp, another mobile messaging service that has more than 700 million users.

A large segment of WhatsApp’s audience is located in less affluent countries outside the US and western Europe, making it more likely that it won’t be adding as many new tools as Messenger has, said David Marcus, who oversees Facebook’s messaging products. Most Messenger apps are installed on iPhones and top-of-the-line Android phones, which provide the processing power needed to handle a range of multipurpose tools.

Add that to the potentially sloppy redundancies between the Messenger service and store apps already in a smartphone, and consumers may remain content to stick with what they know. His background includes building social CRM systems for Fortune 500 companies and developing and marketing mobile products for enterprise and consumer-facing products. The decision to allow outside applications to operate within Messenger mirrors a pivotal decision that Zuckerberg made eight years ago when he opened Facebook to other programmers. BoM could offer push notifications and alerts about the status of your orders, eliminating the need for downloading more store apps for every order you place.

Snapchat is perhaps the best recent example: An “ephemeral” mobile photo-messaging service with a rough user interface that just happened to take off. Marcus, who formerly ran PayPal, is hoping Messenger will follow a similar pattern now that it is operating as an open platform. “We have opened the floodgates,” he said. Now Snapchat is one of the fastest growing social networks in the world—run by a tycoon who shares some traits with a young Mark Zuckerberg—and is becoming a compelling player in mobile video.

Facebook is counting on apps from other developers to enable Messenger users to express their feelings with GIFs, audio clips and other dynamic formats that “will bring a smile to people’s faces,” Marcus said. In his presentation, Zuckerberg predicted messaging apps eventually will include virtual-reality technology, something that Facebook acquired last year when it bought Oculus for $2 billion. It has also partnered with media companies for its Snapchat Discover feature, which delivers short videos and even long text stories from companies like CNN, National Geographic and Vice. The app is slowly rolling out voice calling features to Android users, but does little else besides chat, video and photo sharing, and audio messages.

The Line games platform is approaching 400 million cumulative downloads, while games accounted for over half of Line’s $200 million revenue in Q4 2014. Line is beginning to move into new content, having launched a fund to invest in online-to-offline services, because its financial success is so dependent on games. Parent company Naver missed its most recent financial target because Line’s top games didn’t perform as expected, but, as an app ecosystem, broadening the scope is harder for Line than it is for Tencent/Weixin, which can integrate new services with relative ease — its latest push has been restaurant listings and location-based services. However one reason for this initial approach could be that Facebook is first focused on cracking the U.S., which is the second-largest smartphone market behind China and, crucially, a place where no single chat app has won out. Its Messenger for business platform, the aforementioned replacement for email, requires local customer service teams and actual resources to be effective, so that will entail gradual rollouts worldwide as opposed to automated integration that can roll out fast.

But beyond that, there are important cultural differences in mobile consumption that make creating a powerful messaging platform in the U.S. more challenging than in Asia. In Asia, free text messaging and Internet-powered voice calls are attractive because many consumers are on pre-pay mobile deals — that accounts for over 90 percent of mobile users in India, for example.

For those people, text messages are not free (whether sold as a bundled deal or individual pricing) while equally, in many countries, calling someone who is on a different mobile network is charged at a higher rate than calls made on the same network. (Hence dual SIM devices are popular because it is cheaper to use different SIMs to call different people.) In these cases, the free communications of Line, WeChat, WhatsApp and even Messenger have immediate value that hooks a user in and keeps them. When you sign up for Line in Thailand, for example, you’ll find most of your phone book contacts are there already, which increases the chances that you’ll become a heavy user. With that sticky user experience as its foundation, chat apps in Asia have moved into offer-related services and content like taxis, shopping, payments and more. The same is true for Twitter DMs, Facebook Messenger and other other social networks: If you have used other services to communicate with friends for free for years, why switch now?

Initial reports suggest that Discover is sending plenty of business to its early media partners, but it’s impossible to gauge whether it is increasing engagement among loyal users and broadening Snapchat’s audience beyond early users because the company doesn’t provide user numbers. From what I’ve witnessed in Asia, media and photo integrations are fun, but messaging apps get interesting when they offer more compelling, everyday services. I was pretty blown away during a recent trip to Beijing when my Airbnb host booked me a taxi in a few clicks from inside Weixin; almost in an instant, it was done and she went back to chatting with her friends. With on-demand groceries planned, a TV platform with exclusive content, and other services like taxi booking starting out in Japan, Line might as well be pre-bundled on devices; it’s arguably more important than a phone’s native calling app.

If Facebook needs more local, Western examples beyond Snapchat — which it famously tried to buy for $3 billion — then Canada-based Kik is one to watch. Timing is so often about consumer behavior — just ask the video sharing companies that hit the market before Meerkat and Periscope took off — and Kik’s platform failed because it was too early. That said, the company learned lessons and pivoted to a WeChat-style web-based platform last year, claiming that the change would reduce friction when using third-party services and provide an easier experience all round. A minute or two after downloading it, you sign in to Giphy For Messenger with your Facebook creds and return to Messenger to sync it up and start sharing your own creations. To make things easier, Kik put an HTML5-based browser inside its messaging app so that I can visit the Giphy website, find the GIF I want and quickly ‘Kik’ it over to our chat window within seconds.

That brings the potential for many opportunities beyond just GIF sharing, because sharing any kind of web content on Kik requires minimal effort from consumers, and is easy for developers. It is primarily popular with a younger audience thanks to features like usernames — which avoids the need to share your phone number — and its compatibility with the iPod Touch a couple of years ago. Forget what you might have read about Facebook’s impending demise, it is still huge in places like Africa and Asia, even in some countries where chat apps are well established. With the right integrations, Facebook Messenger could gobble up market share in those places, even though WhatsApp will remain a platform-free messaging app.

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