CONVERSATIONAL COMMERCE
How messaging, chatbots, artificial intelligence and machine learning are changing the way brands connect with consumers.
September 2016
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GOODBYE CHAT, HELLO CONVERSATION
Thanks to social media, mobile devices and bots, chat has evolved into conversation and an opportunity for brands to create a genuine rapport with consumers.
MESSAGING APPS CREATE A NEW ECOSYSTEM FOR BRANDS
People will talk—the question is, will they talk to brands (and their bots)? If so, what types of conversations are they willing to have?
WHERE THE CONVERSATIONS ARE HAPPENING NOW
Facebook dominates when it comes to reaching users, but messaging is not a zero sum game and brands need to understand all of the players involved.
MEC CONSUMER PULSE
Tapping into MEC’s proprietary consumer panel, we uncover the most popular messaging apps, the reasons for use and the consumers behind it all.
THE EMERGENCE OF CONVERSATIONAL COMMERCE
Conversational commerce is not just about sales— brands can use these channels to create value throughout the full scope of the consumer journey.
EVOLVING AND NEAR-FUTURE CONVERSATIONAL CHANNELS
Messaging is the primary opportunity, but conversational commerce and CRM are spilling over into mainstream marketing channels and emerging platforms of all kinds.
HOW BRANDS CAN GET STARTED
The fundamental underpinnings and niche extensions of a conversational commerce strategy.
INNOVATIVE USES OF CONVERSATIONAL PLATFORMS
Examples of brands using conversational marketing to generate brand awareness, build customer relationships and drive transactions.
KEY TAKEAWAYS
A recap of the fundamentals for brands to remember and understand as they consider and build a conversational commerce strategy.
Goodbye chat, hello conversation
The web has always been a conversational medium, from Internet Relay Chat in the 1980s to Snapchat today—digital technology has fed our human desire for discourse with others.
Early platforms established chat as a common social activity on the web. Mobile fast-tracked its evolution into a fundamental human behavior—SMS, for example, is arguably still the most common form of digital communication around the world 1. Together, mobile devices and social media accelerated the emergence of true digital conversations. Whereas chat was mostly text and usually one-to-one; social enabled multimedia sharing on a one-to-few and one-to-many basis. Mobile set the expectation to do so whenever, and wherever we choose. The two terms are still often used interchangeably, but MEC sees a fundamental difference: chat communicates information, while conversation establishes an ongoing and mutually beneficial rapport. Now chatbots have appeared, small pieces of software that use artificial intelligence (AI) and machine learning to mimic the natural flow of human discussion. Bots enable brands to engage consumers directly in conversation—most often in messaging apps but soon, everywhere—in the most relevant way possible. They combine the data-driven efficiency of a computer with the conversational ease of a person, and the result is so authentic that it is often hard to tell whether you are conversing with a human being or a machine. This is driving the evolution of conversational commerce, the practice of establishing a direct, colloquial connection with consumers to build brand awareness, facilitate CRM and enable transactions. While messaging apps are driving its growth, we already see chatbots and conversational commerce spilling over into traditional digital channels like .com and media, and becoming a common user experience element to the burgeoning Internet of Things (IoT). In this Spotlight On Conversational Commerce, MEC maps out the nascent conversational commerce ecosystem, reviews the current opportunities for brands and looks at a few early success stories and trends to watch as the space takes shape.
1. OneReach Blog, September 2015
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Messaging apps create a new ecosystem for brands PEOPLE WILL TALK, BUT WILL THEY TALK TO BRANDS AND THEIR BOTS? SIGNS POINT TO ‘YES’ IN THE WORLD OF MESSAGING APPS The top four messaging apps (Facebook Messenger, WhatsApp, WeChat and Viber) surpassed the top four social networks in active users in early 2015 with nearly three billion monthly global users across all four messaging apps1. Currently, 29% of U.S. adults with Internet access and 36% of U.S. smartphone owners use at least one messaging app 2 (though it is likely most users rely on more than one), with close to 44% of U.S. users following or interacting with at least one brand and 30% following more than one brand3.
U.S. Mobile Chat App Users Who Follow/Connect With Brands Via Chat Apps 3
Yes,one 14% Yes, multiple 30%
No 56%
Source: eMarketer
WHAT ARE CONSUMERS OPEN TO TALKING TO BRANDS ABOUT? A F acebook Messaging Survey, released in early August, sheds considerable light on what consumers are open to when it comes to brands and messaging. This study, conducted in partnership with Nielsen, surveyed 12,500 messaging app users 18+ in 14 markets and across five continents, to determine just how consumers are conversing with brands. Among the findings, it is revealed that:
share photos of products
make a purchase or order
inquire about store hours, location or inventory ask general questions
make or confirm appointments
use messaging to give feedback
Perhaps the most important insight from the study is the fact that 5 3 % of consumers surveyed are m ore likely to shop with a business they can message. Additionally, 63% say they interact with brands in messaging channels more today than they did two years ago and 56% expect this activity to increase over the next two years. According to Facebook, its users now exchange one billion messages with brands per month on Messenger alone and the majority of respondents in this survey stated that messaging has become more simple, more thoughtful and more continuous. Overall, 76% say that messaging apps have improved their lives and all the groups surveyed indicate that they prefer messaging to calls or emails, including 65% of Millennials, 65% of Gen X and 63% of Boomers. Source: Facebook IQ Insights Guide “The Message Heard Around the World,” 2016
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1. Business Insider, April 2015 ; 2. CIO.com; 3. AYTM market research, eMarketer, May 2016; 4. Facebook IQ Insights Guide “The Message Heard Around the World,” 2016
Where the conversations are happening now FACEBOOK DOMINATES MESSAGING GLOBALLY Facebook Messenger (900m) and Facebook-owned WhatsApp (1b) have the largest global user base, dominating throughout The Americas and EMEA. At the 2016 F8 Summit, CEO Mark Zuckerberg announced a free chatbot SDK for Messenger, stating: “We think you should message a business just the way you would message a friend.”
Global Monthly Active Users By App (In Millions) 1
Kakaotalk Telegram BlackBerry Messenger LINE Viber
Skype WeChat QQ Mobile Facebook Messenger WhatsApp 0
200
400
600
800
1000
1200
Source: Statista
Facebook’s supremacy in the messaging space is a catalyst for investment in conversational commerce, providing an easy springboard to scalable success that leverages a brand’s already active user base via a Messenger chatbot. Although brand bots are not available yet on WhatsApp, there are rumors abound that it is testing a notifications service similar to what is available for Messenger. For now, brands are using the platform as a CRM channel powered by human chat.
1. Statista, April 2016
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Where the conversations are happening now MOST PEOPLE USE MORE THAN ONE APP, SO BRANDS MUST DIVERSIFY While Facebook is one of the primary platforms for brands globally and the foremost consideration in the U.S., marketers must understand which other messaging apps are popular with their target audience. Many consumers make use of multiple messaging platforms and some specific demographics might use a smaller, niche platform more actively (or in lieu of Facebook). Millennials and GenZ love Snapchat! 37% of 150m+ daily users1 are 18-24 and more than 60% of U.S. smartphone users ages 13 to 34 2 use the platform.
Kik’s 300m+ global users3 include 40% of U.S. teens and young adults4 and it leads the market for engagement with 14-17 and 18-20 year olds5.
Slack owns only 1%6 of the U.S. market but its user base of digital industry workers represents an appealing audience for many brands.
Apps popular in foreign markets can reach specific ethnographic groups in the U.S., who may use them to connect with friends and family outside of the country (e.g. WhatsApp to reach Hispanics, KaKao Talk to reach Asians).
Though some apps are the main conduit for reaching certain demographics, diversification is still essential to any brand’s messaging strategy. For example, even the most die-hard Snapchat loyalist may use Facebook Messenger and/or a handful of other messaging platforms, as well, making it important to be present in all of the relevant places and platforms. The key is to understand what type of brand presence will be welcome within each.
A recent study reveals that those who use Snapchat are present and active on other messaging apps, proving the diversification and need to be present across platform. Those w ho use Snapchat7…
also use Facebook Messenger
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also use WhatsApp
1. Bloomberg, June 2016; 2. Forbes, April 2016; 3. Kik, July 2016; 4. Forbes, October 2015; 5. Frank Magid, Associates January 2015; 6. Verto Analytics Messaging Apps Report, July 2016; 7. Global Web Index, June 2015
also use Skype
MEC Consumer Pulse: A look at consumer behavior CONSUMER USE OF MESSAGING PLATFORMS IS NUANCED AND DIVERSE Using MEC’s proprietary Consumer Pulse survey, we reached out to 2500 consumers, who are 18+ years old in the U.S., asking what messaging apps they use and how often. The results demonstrate how usage and frequency are not always aligned with many of the niche apps maintaining audiences of loyal and frequent users; thus challenging brands to better understand their particular audience needs.
APP USAGE & FREQUENCY (% OF RESPONDENTS)
USE APP FREQUENTLY (1+ PER DAY) USE APP
80%
70% 60% 50%
40% 30% 20%
10% 0%
Smartphone owners are more likely to use Snapchat, WhatsApp, Instagram, Viber, WeChat, and Telegram. 7
M ales overindex on most “non-mainstream apps” with penetration at less than 10%, while females are more likely to use Facebook Messenger.
2 5 -34 and 3 5 -44 year olds are the highest users across the board, with 1 8 -24 year olds more likely to use Snapchat, Instagram, Kik, Amazon Alexa, PlayStation Messenger, Slack and Pinger.
Messaging app usage drops off among 4 5 + year olds, but is still relatively high among Facebook and Skype.
MEC Consumer Pulse: A look at consumer behavior The user demographics of each app as well as the most common purposes and uses are highly beneficial to examine when developing a conversational commerce strategy. MEC uncovers the distinct use cases for each app, the gender split and the median age across the 18+ sample.
General usage activities such as texting, planning activities and using to replace SMS
Sharing content such as photos and videos, commenting on others’ posts
Chatting and collaborating with coworkers
Following brands and discovering new products
Direct engagements with brands (chatting with bots or purchases directly through messaging apps)
AB OUT MEC CONSUMER PULSE: MEC CONSUMER PULSE IS OUR AGENCY-DRIVEN A&I INITIATIVE THAT GIVES REAL INSIGHTS AND DATA ON CONSUMERS AND BEYOND. THE RESULTS HAVE BEEN SOURCED FROM MEC’S PROPRIETARY SURVEY, AMONG 2500 RESPONDENTS BETWEEN AUG 1ST AND AUG 7TH IN THE U.S. 8
The emergence of conversational commerce CONVERSATIONAL COMMERCE IS NOT JUST ABOUT REVENUE — IT IS AN OPPORTUNITY TO CREATE VALUE THROUGHOUT THE CONSUMER JOURNEY Today, messaging apps present the biggest opportunity given their scale and the zeal with which consumers have embraced them. Most marketers will be able to find their target audience in this fast growing ecosystem and engage them directly in environments where they are already primed for conversation. Brands are welcome, but they cannot barge in and they definitely should not lurk. Icebreakers, usually as some form of sponsored content, utility or experience are opportunities, such as: Branded content: Photos, videos and editorial content, such as Snapchat’s Sponsored Stories, reinforce awareness with existing followers and open the door to direct conversations with potential new customers. Branded utility: Tools that enhance the experience—e.g. custom emojis or filters—foster a positive impression of the brand and positively predispose potential customers. Sponsored chats: These enable brands to seek out well-qualified prospects, invite them to converse and tell them about the brand in a very human fashion, answering questions and developing a refined sense of that prospect’s potential to convert. It should be noted that very few messaging apps offer typical ad units—the focus in these environments is about contributing to the dialogue versus making a statement.
CHATBOTS ARE THE MOST PROMISING ASPECT OF CONVERSATIONAL COMMERCE Not every messaging app supports chatbots (some only allow humanpowered chat), nor does every bot qualify as truly smart (many are programmed to return automated responses and do not make use of machine learning). Nonetheless, it is easy to see that intelligent chatbots are the catalyst that will ignite conversational commerce. Bots can scan a database and return product details, advice or account information in a matter of seconds. The exchange will feel as natural and likely be more satisfying than talking to a person. Due to this, it is natural that customer service requests will begin to flow to conversational channels and bots, leading to greater efficiency and lower CRM costs for brands.
It is a short leap from CRM to commerce, but the two are often intertwined. Consumers are increasingly comfortable with digital payments with brands they trust, so conducting a transaction via chat will simply be another, more convenient payment option. For brands, it opens up a new conduit for commerce accelerated by highly personalized, data-driven recommendations.
Chatbots are a form of Artificial Intelligence (AI), software that performs tasks that normally require human intelligence, such as visual perception, speech recognition and decision -making. Many also make use of machine learning, in which the bot learns organically when exposed to new data (versus being programmed) much like a human brain. Together, they couple the speed and vast knowledge of a machine with the familiar ease of human interaction. 9
Evolving conversational channels CONVERSATIONAL CHANNELS FOR BRANDS TO ENGAGE WITH Voice assistants (or Hearables) are becoming a common user experience layered in mobile. and will be integral to the Connected Home, Connected Car and other touchpoints in the Internet of Things (IoT). Operating system (OS) apps (e.g. Siri and Cortana), third party apps (e.g. Hound) and proprietary hardware and software ecosystems (e.g. Amazon’s Echo) are all part of the next wave of opportunity for conversational commerce. These platforms are navigated by voice, deliver content and utility, or perform a task according to verbal commands. This market is smaller than that of messaging apps; for example, the Amazon Echo has sold only three million units to date. However, it is a significant proving ground for consumer adoption of bot-driven experiences, particularly in the Internet of Things, where interactions on wearables and in Connected Home and Connected Car will be driven more by voice, gesture and movement than clicks and taps.
Household names that range from traditional CPG brands like Campbell’s to new digital-first titans like Uber are developing skills for Amazon Alexa.
Owned and Paid media including .com websites, native apps, OOH and ad units
Webware.io, an ecommerce platform for small and medium size business. It uses a chatbot named Harley to converse with potential customers via email and help them scope out projects.
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In typical zero sum game fashion, the marketing industry has been quick to label messaging apps the new browser and chatbots as the new websites. MEC believes that it is more likely that we will see chat becoming an additional layer to familiar digital formats versus replacing them. Before long, we expect AI chatbots to become a staple feature of owned media, particularly for websites and apps, as well as a common component of paid media, from simple ad units with a click-to-chat button.
Near-future conversational channels NEAR-FUTURE CONVERSATIONAL CHANNELS Other Apps Messaging is now a standard feature of many types of apps and bots. Some are official bots designed to augment an app’s functionality, while many have a more nefarious purpose—e.g. it is estimated that a significant amount of Tinder users are actually bots trolling for personal information. However, Facebook‘s investment in bots has legitimized them as a brand tool and this may open the door to more commercial app-based businesses opening their platforms to third party brand bots. For example: Dating Apps might welcome third party bots to plan activities. Imagine if the Fandango bot could help you choose and book a movie for your date directly from the Tinder app.
Business productivity apps, like Skype and Slack, are likely to be the forerunners on bot interoperability thanks to their focus on reducing friction for the user.
Lifestyle Apps might integrate bots to facilitate booking and ordering — e.g. a restaurant’s bot might help you book a table and give dietary preferences in the Yelp app. Networking Apps might integrate bots to help users interact with companies – e.g. a hiring company might have a bot in LinkedIn that will answer your questions about corporate culture.
The Internet of Things (IoT) Chatbots make it possible for conversations to happen anywhere through the user’s chosen method of communication, whether it is text, voice or as the Internet of Things expands, a gesture or glance. As the technology matures, we will see consumers choosing to converse with brand bots via ATMs, in cars, through appliances and a number of in-home and wearable personal digital assistants. These IoT opportunities are still emerging, but brands need not wait to test the waters. Those that focus their efforts figuring out what constitutes a value exchange in these instances will help write the rules for engagement that everyone else will follow.
Mosaic a startup backed by venture capital group Y Combinator, is a sort of macrobot, designed to chat all of your many devices, from your FitBit to your Nest thermostat. Mosaic ensures that your devices are performing optimally and reports back to you (via chat) on how things are going. Think of it as a chatbot concierge for your connected life.
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How brands can get started AS CONVERSATIONAL COMMERCE BECOMES MAINSTREAM FOR BRANDS AND CONSUMERS, NEW OPPORTUNITIES AND USE CASES WILL EVOLVE FAST 1. Select the appropriate platforms and map out a content & UX strategy for each Different platforms will call for different conversations — e.g. while Snapchat users gravitate towards visual elements such as filters, other platforms, such as Facebook Messenger, will require a focus on conversational message flows.
Most platforms will present some flexibility in making content accessible, from RSS feeds, to APIs, to direct insertion via human input. Many, like Facebook Messenger, will also offer AI and machine learning resources to facilitate the development of smart message flows. Beauty-focused emojis on messaging
As the popularity of emoji has proved, ease of use is paramount to user apps have been highly successful satisfaction. However you choose to engage your consumers in content marketing for L'Oréal conversational channels the experience should be simple and enjoyable. 2. Consider long-term distribution outside of messaging
Currently, the trend is for people to talk to bots, but before long, it will be just as common for bots to talk to each other. As AI matures, brands will develop bespoke bots that streamline the activities consumers find tedious. Microsoft, for example, has opened the Skype platform to many third party bots. In the not so distant future, the Skype bot might automatically negotiate travel arrangements with the HipMunk bot when your conversation indicates that you have agreed to a business trip.
Skype offers bots from Skyscanner, Hipmunk, StubHub and IFTTT
Simply put, messaging apps are the ideal place to hone your strategy. However, third party apps, the apps of brand partners and the Internet of Things, may prove to be equally important.
While there will be overlap in terms of content, and to a degree, technology, brands that do not have significant internal resources may find it beneficial to standardize with a partner that specializes in front and backend bot infrastructure.
3. Plan for natural—and eventually paid—search
As the bot ecosystem rapidly grows, brands will need to develop search strategies to ensure optimal visibility. At present, being discovered in messaging apps hinges heavily on social efforts and content distribution. However, as more and more bots pour into the messaging platforms, and as bot interoperability grows, it will get harder to maintain visibility. Bot directories are appearing for specific operating systems and popular apps like Skype and Messenger, while other directories aggregate bots across the full spectrum of apps and operating systems. Both will factor in the success of a brand’s conversational marketing strategy and will require a carefully curated application of paid and natural visibility techniques. 12
There are bot app stores and directories that are appearing across messaging platforms
Innovative uses of conversational platforms CONVERSATIONAL DISCOVERY: CAMPBELL’S KITCHEN AND WATSON Campbell’s Kitchen makes recipes available to home cooks with a custom Alexa skill for the Amazon Echo. Users simply say, “Alexa, what’s for dinner?” and the skill walks them through the day’s top five recipes, then customizes recommendations based on desired ingredients and the amount of time available to cook the meal. Campbell’s Kitchen for the Alexa platform makes recipe content seamlessly accessible for consumers in the moment where it will be most valuable, illustrating an excellent example of how conversational platforms can play a key role in discovery.
CONVERSATIONAL BRAND AWARENESS: PARAMOUNT AND KIK MESSENGER Paramount partnered with Kik Messenger to design a Teenage Mutant Ninja Turtles chatbot that targets potential fans based on keywords in their conversations and invites them to converse with Mikey, the self-described “dopest mutant” turtle. The Kik audience skews heavily towards teenagers, making it the ideal vehicle for brand awareness.
More bots will follow featuring the rest of the Ninja Turtle crew and will allow fans to chat with the characters, get sneak peeks at the film and collect branded gifs to share with friends.
CONVERSATIONAL COMMERCE: TACOBELL AND SLACK Taco Bell’s AI chatbot on Slack is a perfect example of how brands can use data, AI and the understanding of consumer needs and behaviors at a particular moment to accelerate actual com merce. This bot positions Taco Bell conveniently in front of hungry workers who are so plugged in they stay connected to Slack an average of ten hours a day. Users can add the bot as a friend and casually chat with it like a team member, making it easy to chat and make an order for pickup when hunger strikes.
CONVERSATIONAL CRM: STARWOOD AND WHATSAPP Starwood Hotels uses WhatsApp to power CRM in parts of the world where this app reigns as the dominant messaging app, particularly Africa and the Middle East (BBM and iChat are also supported). Users can connect directly with a human concierge (though bots are probably not far behind) to confirm or change reservations and customize all aspects of their stay, from expressing dietary requirements to requesting wakeup calls. The brand’s decision to offer support through channels that are becoming the preferred means of communication in these markets illustrates the promise of conversational platforms for C RM.
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CONVERSATIONAL COMMERCE IS MORE THAN JUST A SALES CHANNEL
There is little doubt that conversational platforms will be a conduit for sales, but they also have equally strong potential to be a part of the entire consumer journey, from the earliest stages of awareness to loyalty and advocacy.
MESSAGING APPS PRESENT AN OPPORTUNITY FOR BRANDS TO HONE A CONVERSATIONAL COMMERCE STRATEGY
Messaging apps are not the only opportunity but they are the biggest in terms of reach and frequency. Smart brands are investing in the biggest global platforms and in the niche apps uniquely relevant to their demographics, to develop an understanding of user experience and content that can be eventually extended to other platforms over time.
DIVERSIFICATION WILL BE ESSENTIAL TO EVERY BRAND’S STRATEGY
Once consumers agree to converse with your brands, they will expect to do so on their terms, when and where they choose. It will be essential not only to diversify one’s presence in messaging apps but to think about other platforms as well including the Internet of Things and interoperability with third party apps and other brands’ bots.
EMBRACE BOTS—THEY ARE THE TRANSFORMATIVE SPARK TO THE NEXT STAGE OF THE INTERNET
Conversational commerce is about more than bots and AI—it is a transformation from the broadcast model of marketing to one based on a direct value exchange between brand and consumer. Nonetheless, bots will be a key driver of the shift, making it easier than ever for brands to satisfy consumers’ needs. It is imperative for brands to start to test and learn now.
LIKE EVERYTHING ELSE, CONVERSATIONAL COMMERCE WILL EVOLVE FAST
Brands will have to maintain an iterative strategic mind-set to keep up with conversational commerce because, like all aspects of digital marketing, it is changing on a near-daily basis. It is essential to keep an eye on the forerunners in the space—the messaging platforms, mobile operating systems and outliers like Amazon—to understand what comes next.
For questions or to request more information, please contact Rac hel Pasqua (
[email protected]).
