WhatsApp and Line: 1 billion users or $1 billion?

Messaging apps are currently the talk of the town in ad land. WhatsApp’s recent announcement that the Facebook-owned messaging app has joined the very select group of apps with a billion users was met with adulation across the industry, whilst simultaneously putting archrival Google-owned Alphabets’ announcement just hours earlier that Gmail had met the same milestone in the shade.

Every other day something is released about Snapchat (the young pretender), Facebook Messenger (surely next to the billion club) or WeChat (yes, you really can make a doctor’s appointment on WeChat). Most industry leaders have heralded 2016 the ‘year of the messaging app’ in their annual predictions as we speculate on Facebook creating an ecosystem to rival WeChat and Line but with a larger and more globally diversified user base.

So, about that last messaging app I mentioned, Line. It dominates in Japan, Thailand and Taiwan and now has 45 million users in Indonesia. Line also made a pretty big recent announcement that its revenue for 2015 was up 40 percent to ¥120.7 billion (approximately US$1.03 billion), and yet the news was barely picked up by the media. Whilst Line's latest monthly active user base is still ‘only’ 215 million, a more thorough read of their earnings report offers some potential insights into how larger, less sophisticated apps like WhatsApp and Facebook Messenger may evolve. However, it also provokes marketers to seriously start considering other messaging apps as an important part of their brand’s communications strategy. 

The earnings call states that 30 percent of Line’s revenue came from its advertising business. So what does ‘advertising’ on Line really mean for marketers?

There are three core advertising products across all Line markets.

• Stickers: Essentially brand emoji that visually depict a user's words or emotions.
• Official Accounts: For a subscription fee, brands are given the ability to send messages to those who choose to follow their account
• Free Coin Video: A value exchange where people opt in to view a video and are awarded free coins that can be redeemed to buy things in the Line ecosystem.

Line also has market specific opportunities in properties like Line Music and News in Japan and Line TV in Thailand.

Other apps like WeChat and Kakao allow opportunities for brand integration in their home markets of China and Korea, respectively, while Viber is also courting marketing budgets with ‘public chat’ accounts (similar to official accounts) and also recently introduced branded stickers.

It’s all about the ecosystem

The characters in Line owe their origins to kawaii culture in Japan. By initially targeting early adopter teenage girls, Line seeded its characters through the social utility of stickers, but then monetised them through branded content, merchandise and pop-up stores. This established Line in popular culture not only in Japan but also in many other Asian markets. Despite Line’s monetisation success, I don’t see characters being something WhatsApp will look to replicate due to cultural and strategic reasons.

Without a doubt, it’s the ecosystem that Western apps are striving to replicate and the integration of mobile commerce. Facebook aims to take users through the funnel to purchase (and customer service) in the platform. Line and WeChat by comparison already have their own micro-payment system baked in, meaning seamless integration with the ecosystem that in turn benefits brands and advertising. So those free coins you got for watching that ad, they can go towards your next coffee.

What it means to marketers right now

And for me, that is the key takeout here. Whilst Facebook has the scale, opportunities to market directly to Facebook Messenger’s 800 million users and WhatsApp’s 1 billion users do not currently exist. You might be able to talk to a restaurant or book an Uber in the US, but that is not very meaningful to McDonald’s in Singapore or Coke in Indonesia.

Facebook is an amazing advertising platform, offering scale, targeting and third-party verification and measurement throughout the funnel. You will not get those things with any messenger app. I am sure Messenger and WhatsApp will offer opportunities for brands in the future, but if you want to put your brand into peer to peer conversation and tap into a messaging app ecosystem in Asia right now, focus on the platforms where it’s possible, and then test and learn rather than miss out. 

Jonathan Rudd is regional digital director with Carat