Understand how Messaging and Chatbots could shape our future- looking at the growth of messaging, major players, barriers and long term implications

1. UNDERSTANDING
MESSAGING APPS & BOTS
25/07/2016

2. Why Care?
INTRODUCTION
Messaging apps are the social networks created for the smartphone era – currently
untapped by the majority of brands in the UK, not least because messaging platforms are
still formulating their brand offering, it is a trend that will shape how we think about digital
in the years to come
This first section of this Spotlight will explore messaging:
-how a smartphone first culture has precipitated messaging’s popularity and
transformed the way we communicate
-why there were more than 1.4 billion people (75% of all smartphone users) using
messaging apps by the end of 2015
-the current major players and advertising options
-And how messaging is becoming the entry point into the internet
The second part will show how messaging apps intend to use the chatbots that inhabit
them to:
-become the focal point for internet search via personal assistants
-drive conversational commerce
-offer seamless customer service
Lastly we will analyse the potential long-term implications:
-The end of search as we know it
-The end of websites as the main commerce destination
-The end of apps
-And Apple as the next Blackberry

3. THE MOBILE ERA: A breakdown on the impact of Smartphones and the
internet
THE GROWTH OF MESSAGING
APPS:
Stats on how Messaging Apps have grown. The social
network for the mobile era
EXPLAINING THE POPULARITY
BEHIND MESSAGING:
What do users like about Messaging
MAJOR PLAYERS: Who are the major Messaging Apps and what
advertising do they offer
CHATBOT USER SCENARIOS IN
THE WEST:
How do these Messaging Apps intend to use chatbots
for search, commerce and customer service
CURRENT BARRIERS: Current Barriers that chatbots have to overcome: user
mind-set and technological limitations
OVERCOMING BARRIERS How a demand for a better user experience and the
drive from Facebook, Google and others can force
change
LONG TERM IMPLICATIONS The implications of chatbots for search, commerce,
apps…. And Apple
KEY TAKEOUTS: Top 5 key takeouts
WHAT’S INSIDE

4. • Smartphones are replacing computers for internet use: Two-thirds (65%) of all adults
use a smartphone to go online; up by 4% since 2014. Smartphones are the only device
used to go online, at home and elsewhere, by a majority of adults.
• Smartphones are the preferred device for five out of nine online activities Internet
users are more likely to say that they use a smartphone (rather than any other device) for
social media, listening to streamed music, watching short video clips, looking at news
websites or apps, and surfing or browsing online
• Mobiles are now the most-missed media device among all adults While in 2014, adults
were most likely to say they would miss theirTV set the most (37% vs. 30% in 2015),
mobile phones are now the most missed media device (38% vs. 32% in 2014)
• Two-thirds of adults with a profile use social media more than once a day, and they
are most likely to do so on a smartphone Two-thirds (65%) of adults with a social media
profile visit any social media site or app more than once a day, unchanged since 2014.
This rises to 85% of 16-24s. Just under six in ten (57%) of those who ever go online to look
at social media sites or apps say they mostly use a smartphone to do
• There has been a considerable rise (from 6% in 2014 to 16% in 2015) in the proportion
of adults who only use smartphones or tablets to go online, and not a PC/laptop. In
other words, these newer devices are not just supplementing PCs/laptops, but are
starting to replace them.This pattern is seen across all ages of adults, across all socio-
economic groups and for males and females
Why Care?
THE MOBILE ERA
Ofcom 2016 media habits
A SMARTPHONE FIRST CULTURE
“THE PC IS FADING IN RELEVANCE, ANDTHE BROWSER ALONG WITH IT”
BenThompson

5. Why Care?
THE GROWTH OF
MESSAGING APPS
According to eMarketer, more than 1.4 billion consumers were using
messaging apps by the end of 2015; that’s 75% of all smartphone users
and an increase of 31.6% over the previous year.
0
5
10
15
20
25
30
35
40
WhatsApp WeChat Facebook
Messenger
Snapchat YouTube Twitter Instagram Facebook
Which of the following services have you actively engaged with or contributed to in the
past month via any device?
(Global)
Q2 2015 Q3 2015 Q4 2015 Q1 2016
0
10
20
30
40
50
60
WhatsApp Facebook
Messenger
Snapchat YouTube Twitter Instagram Facebook
Which of the following services have you actively engaged with or contributed to in the
past month via any device?
(UK)
Q2 2015 Q3 2015 Q4 2015 Q1 2016
Messaging apps
Messaging apps
THE NEW SOCIAL: MESSAGINGAPPS. SOCIAL NETWORKS CREATED
FORTHE SMARTPHONE ERA
Charts sourced from GWI. Please note charts have different scales

6. Why Care?
Messaging apps and their popularity are why many are hailing bots as the future to
how we will use the internet. Ben Eidelson, ex product manager of Google,
identified three reasons why messaging has become so popular:
ASYNCHRONOUS BY DEFAULT, SYNCHRONOUS WHEN APPROPRIATE
conversations can seamlessly escalate from a slow back-and-forth, sometimes
spanning many hours, to the quick synchronicity of old-school desktop chat.As a
result, we’ve largely done away with the ‘brb’ and ‘u there?’.The sender knows you’ll
be there when you’re there.This behaviour is fundamentally enabled by mobile—
the product expectation is that a sent message will sit in the recipient’s pocket until
they can and desire to answer it.
LONG LIVED CONVERSATIONS
One of the most powerful aspects of messaging is the treatment of messages
within the context of a long lived conversation.The conversation is the container
that is defined as between two (or more) people, not based on topic. In fact, much
like real-life conversations, topics change constantly.These long lived, multi-topic,
conversations are what make messaging the best digital representation of your
relationships. If you ask someone “pull out your phone and show me where your
significant other exists on this device?” the answer is not in the address book, email
threads, or their social profile, it’s in the messaging conversation.
THE CONVERSATION LIST
The conversation list is the hub of all of the relationships in your life.The list is quite
simple—the conversation that had most recent activity (inbound or outbound) is
also the one that you’re most likely to hop back into, so it’s up at the top.This
simplicity is powerful—there’s no need to signal to the messaging apps who is the
most important.The most important conversations naturally live at the top.
Conversations that are days old fall down the list gracefully, but can be resurrected
just as easily. Conversations are mostly from people you care about means that the
conversation list is a great approximation for ‘who do I care about talking with right
now’.
WHY MESSAGING APPS ARE
POPULAR
“MESSAGING …THECHILDOFTHE SOCIALAND MOBILE
PLATFORMS” BEN EIDELSON

7. Facebook Messenger:
Globally 900 million people use Facebook Messenger
each month
• In just over a year Messenger has increased its
user base by 300% (Apr 14 to Dec 15)
• Messenger is the second most downloaded app
of all time (behind Facebook)
• Messenger is the most popular messaging app in
the UK and the second most popular social
network, behind Facebook
• Advertising: yes, currently testing Sponsored
Messages and Click To Message ads
KEY STATS:
MAJOR PLAYERS
WhatsApp:
1 Billion people use WhatsApp
• 62% of Whatsapp users use the app more than
once a day
• 1.6bn photos are shared daily
• WhatsApp is the second most popular
messaging app in the UK and the third most
popular social network, behind Messenger
Facebook
• Advertising: no
WeChat:
697m active users
The most popular social network in the Asia Pacific
region
• The most advanced messenger app of them all. A
comprehensive eco-system that includes:
- Ecommerce (e.g. booking/paying for a cinema
ticket, paying bills)
- Customer Service
- Banking
- Advertising: yes, with WeChat’s moments (think
Facebook’s newsfeed)
KIK (the Wildcard):
Globally 275m users
• Kik claims as many as 40% of US teens are on
the chat app
• 2 years before Messenger, Kik focused on bots
and now boasts 3,000 bots and has a Chatbot
store
• Advertising: yes, native-ad experiences in
which Kik Points, used to buy emojis and other
Kik content, are awarded for viewing ads or
playing branded mini games.

8. AND LATECOMMERS
Google launched its messenger app in May. Called Allo , it’s a “smart messaging app”
that uses the full armoury of Google artificial intelligence :
• When your friends message you Allo offers you a choice of responses it thinks you
might want to use
• e.g. a friend asks you to dinner, one
of Allo’s suggested responses is
“What time?”The more you use Allo,
the more Smart Replies will start to
sound like you.
• Allo can also make reservations for
restaurants, find sports scores,
providing the capabilities of Google
Search. Significantly the user won’t
need to move away from Allo to tap
into search
Is it too late to make an impact?
• Google is playing catch-up and has
ground to make up, particularly on
Facebook where Messenger
regularly tops the download charts
• As Google found with Google+ , it’s hard to persuade people to adopt another social
network when they’re already fully immersed into the one that they’re currently
using- if their friends are not on there already what’s the point? AndGoogle’s
competitors have a stranglehold on the messenger market.Will automatic replies be
enough to encourage user migration to a new app? It’s debatable
GOOGLEALLO

9. Why Care?
AN ENTRY POINT INTO THE
INTERNET
MESSAGINGAPPS ASYOUR SECOND SCREEN
• Mary Meeker’s 2016 internet trends report showed how messaging apps have
increasingly become a smartphone user’s second home screen and their entry point
into the internet, debunking the previously commonly held assertion that the mobile
home screen is the portal into people’s mobile device
• Smartphone users are consolidating where they spend most on their time online:
Meeker’s report found that although typical mobile users around the world have about
33 apps installed on their phones, they spend 80% of that time in one of three apps:
Facebook, Facebook-ownedWhatsApp, or Chrome

10. Social is changing
CHATBOTS USER CASE SCENARIOS IN
THE WEST
Messaging apps are developing chatbots to act as your own personal assistant, competing
with Siri andAlexa; Facebook has M and Google will introduceGoogle Assistant. These bots
will offer a conversational interface that essentially is a new product for searching.The
PersonalAssistant will be able to:
• ask a question for an answer, and follow up with multiple questions e.g. a user can ask to
see a list of movies playing nearby. Following that, if a user adds, “I want to bring my kids
this time”, the search results will be refined as to only show child-friendly films
• Other features include being able to make restaurant reservations, finding a birthday
gift, suggesting—and then booking—holidays.
• In short, as Google states about its assistant, the aim of these chatbots is for the user to:
Get answers, find information, and get things done without ever having to leave your
conversation. (or app)
FACEBOOK’S M GOOGLE ASSISTANT
“HUMAN LANGUAGE ISTHE NEW USER INTERFACE. BOTS ARE LIKE APPS AND
DIGITAL ASSISTANTS ARE LIKE META APPS,ORTHE NEW BROWSERS. “
SATYA NADELLA, CHIEF EXECUTIVE MICROSOFT
CHATBOTS FOR PERSONALASSISTANTS

11. Social is changing
CHATBOTS USER CASE SCENARIOS IN
THE WEST
Traditional e-commerce journey: you go
to a website.
You have to create an account - that's
one email.
You add something to your shopping cart
and check out - that's another email.The
package ships - that's another email.
When it arrives, that's another.
That's four emails that are distinct
threads that are not canonical.
Impact: It's painful on desktop, it's
impossible on mobile.That's why, for
the majority of online retailers, 60% of
their website traffic is mobile - but only
10% to 12% of checkouts are mobile.
And mobile traffic will continue
increasing.
THE PRESENT
Messenger's answer is to enable businesses
and customers to communicate through
conversation threads
Impact: e.g. order aT-shirt and you get a
message with a shipping notification and a
map . A purchasers whole history with the
outlet is on that thread
After months without any contact a consumer
can just message to order - and the outlet can
reply, 'Would you like the crew type like your
previousT-shirts?‘
Once you interact with a business, you open
a thread that will stay forever.You never lose
context, and the business never loses context
about who you are and your past purchases
A seamless experience
THE FUTURE
CHATBOTS FOR CONVERSATIONAL COMMERCE

12. Social is changing
CHATBOTS USER CASE SCENARIOS IN
THE WEST
• Bots will allow people to order products, or return them, by just talking to a robot.That
automated customer service rep would be able to send back programmed replies —
taking people through the entire process of returning a product that they don’t like, for
example.
• Brands like KLM and Hyatt have already integrated Facebook Messenger into their
digital mix. “The addition of Messenger to our around-the-clock social care efforts was a
no-brainer. It’s just one more channel in which we get to have meaningful conversations
with guests and help them to be their best, on the road and right away. But the biggest
advantage is that it effectively makes Hyatt a person inside the ecosystem and adds
accountability — with the typing indicators, ‘read’ and ‘last seen’ notifications.” Dan
Moriarty, director of digital strategy and activation for Hyatt.
CHATBOTS FOR CUSTOMER SERVICE
“YOU SHOULD BE ABLETO MESSAGE A BUSINESS INTHE SAMEWAYYOU’D
MESSAGE A FRIEND”
MARK ZUCKERBERG

13. CURRENT BARRIERS
The barriers are big, not least requiring
a wholesale change in customer mind-
set to how we currently think about
shopping. Social is used for inspiration,
browsing, discovering yes, but not
shopping. In the most part,
unsurprisingly, we are using social
networks how they’re intended to be
used: posting pictures, giving updates,
consuming content, it’s quite a
transition in behaviour to go from this
to becoming an active shopper.
Even with the potential hegemony of a
messaging app, as China’s WeChat has
show, it’s a further stretch to go from
using a web interface to conversational
commerce- users and brands want that
simple web interface , just within a
messaging app
At the moment the hype surrounding
chatbots is not based in the reality of
what they’re currently offering: an
experience that is full of confusion and
misunderstanding. Far removed from
the seamless experience Mark
Zuckerberg is been selling us.
Such a difficult user experience will
mean that early adopters are unlikely
to return and importantly are also
unlikely to recommend chatbots to
their friends, stymieing any potential
word of mouth snowball effect
“ chatbots leave you with that same
itch in the back of your mind that it’s
easier to get the weather or send flowers
the old-fashioned way.” (GIZMODO)
CULTURAL:
CHANGINGUSER MINDSET
PRACTICAL:
CURRENT LIMITATIONS

14. Inspired byWeChat
FORWECHAT MENUSWEBVIEW STILL REIGN SUPREME NOT
CONVERSATIONS
CURRENT BARRIERS:WECHAT CASE
STUDY
These western messaging apps are all, as KIK founderTed Livingston described, aiming to
“become theWeChat of theWest”: the go to destination for people to chat to friends, but
also to order a taxi, buy take-out food and shop for clothes. WeChat’s impact in China has
been such that more official accounts (brand accounts) are created on WeChat each day in
China than websites brought online and has reduced the average number of apps used to
just 2 (WeChat and Sina Weibo) .WeChat has created total saturation among both
users and businesses.
But as Dan Grover, product manager atWeChat, argues that what people wanted wasn’t to
be able to have a conversation with brands, but more conventional input mechanisms such
as multiple choice answers or buttons that appear in chat bubbles.As he notesWeChat
carried the “make every interaction a conversation” torch as far as it could. It added
countless features to itsAPIs — and yet those that actually succeeded in bringing value to
users were the ones that peeled back conventions of “conversational” UI. Most
instructively, these successes were borne out of watching how users and
brands actually used the app and seeking to optimize those cases.
Grover uses ordering a pizza to illustrate his point of conversation threads (he uses
Microsoft’s Skype Bot as an example) vs.WeChat’s current model of HTML5 menus and
webview interface to highlight conversational commerce takes 73 taps, compared to
WeChat’s 16 taps.
As analyst Connie Chan tweeted: If texting takes more time than clicking a button on a
webview, why is it better?
WECHAT
COMMERCE
CONVERSATION
COMMERCE

15. OVERCOMING BARRIERS
THE USER
BASE EXISTS
ALREADY
Fertile foundations: Messaging apps don’t have the problem of
converting users who aren’t there; the most popular messaging
app, Facebook Messenger, has 900m active users and is the
second most popular social network (behind Facebook) in the UK
Once you have this user base it’s easier to set about broadening
how people use messaging; we can point to how Facebook has
diversified their network and how users have followed to
understand potential
CHANGE WILL
BE DRIVEN
FROM BELOW
Smartphone users are organically moving towards an integrated
experience: messaging apps are acting as an entry point into the
internet, becoming a second home screen to many people
already. The chatbot personal assistants (M ,or Google Assistant)
tap into this existing demand, offering a seamless search
experience for the smartphone era and removing the disruption
of having a separate app for search
AND ABOVE With Google and Facebook embracing chatbots as the future, the
way we use our smartphones and think about messaging will be
forced to change –as Facebook, for example, has shown when it
separated its messaging function to become a separate platform,
forcing people to download it as an app, they have the weight to
help force change from above
IN 1995 NEWSWEEK PRODUCEDAN ARTICLETITLED “THE INTERNET?
BAH!”.
Yes chatbots currently are very limited. Like the internet in 1995, it’s a mess. Like the internet
in 1995, it will get better. What we’re seeing at the moment is the first iteration of chatbots on
messaging apps, often rushed out to be the first brand on there, while developers are still
experimenting with capabilities. We’d be naive to think that the first chatbots will have the
same limited capabilities that they currently have in the next few years- once this usability
improves the conditions are there for chatbots to flourish

16. LONGTERM POTENTIAL
IMPLICATIONS
THE END OF
SEARCHAS WE
KNOW IT?
Conversation bots will be the search function for the mobile era. If
users can get all the information they need through asking bots in
Messaging Apps, they'll be less likely to want to open up a
different search product
In the same way Google charges advertisers to appear higher in
suggested search results, businesses will also be able to pay for
greater visibility for Messenger search results.
THE END OF
WEBSITES AS
THE MAIN
COMMERCE
DESTINATION?
Conversational commerce will make having a brand presence
within a messaging app of greater necessity than the traditional
website
If a user can find and buy the items that they want within the
messaging app, again, why would a user choose to leave– the
added benefit is that these conversational threads mean the
business and the customer never lose context about who you are
and your past purchases
THE END OF
APPS?
Bots run in the background of a company’s Messenger service.
That means that there are no apps to download. Users get
convenience; the ability to talk to companies individually through
the messaging platform will mean users won’t have to download
individual apps for each company that they use.
Facebook, or another competitor, will gets its own alternative
to Apple’s App Store
“No one wants to have to install a new app for every business or
service that they want to interact with” Mark Zuckerberg
AND APPLE AS
THE NEXT
BLACKBERRY?
Marco Arment has argued that if the future is advanced AI,
personal assistants and voice interfaces Apple is too far behind to
be able to challenge and there’s no quick fix.
“Apple will find itself in a similar position as BlackBerry did almost a
decade ago: what they’re able to do, despite being very good at it,
won’t be enough anymore, and they won’t be able to catch up.”

17. KEY TAKEAWAYS
THE MOBILE ERA WILL
CHANGE HOW WE USE
THE INTERNET
Two-thirds (65%) of all adults use a
smartphone to go online; with the emergence
of messaging apps as a second home screen
we’re already seeing how a more user-friendly
mobile experience can change our user habits
MESSAGING ISTHE
SOCIAL NETWORK
FOR THE MOBILE ERA
Facebook Messenger andWhatsApp are the
second and third most popular social networks
in the UK; overall, more than 1.4 billion
consumers were using messaging apps by the
end of 2015; that’s 75% of all smartphone users
and an increase of 31.6% over the previous year
CHATBOTS ARETHE
BROWSERS OF
TOMORROW
Chatbots- and personal assistant chatbots in
particular – will provide a seamless form of
search within messaging without the
interruption of going to a separate app for
search; tapping into smartphone user
behaviour that is consolidating its app usage
rather then diversifying
EXISTING USERBASE
AND IMPETUS FROM
ABOVE AND BELOW
WILL DRIVE CHANGE
Smartphone users demand for a seamless
mobile experience and a consolidated offering
gives messaging apps the platform to drive
change within a user base that is larger than
any other social network apart from Facebook
THE END OF SEARCH,
APPS AND WEBSITES
ASWE NOW KNOW IT
If chatbots successfully become part of the
fabric of our smartphone user behaviour the
need to go to separate apps becomes
increasingly obsolete, putting the long-term
future of search, apps and websites in doubt

18. APPENDIX
http://stakeholders.ofcom.org.uk/market-data-research/other/research-
publications/adults/media-lit-2016/
http://www.emarketer.com/Article/Mobile-Messaging-Reach-14-Billion-Worldwide-
2015/1013215
https://medium.com/@ben8128/the-messaging-landscape-in-2016-
13b25cdf2f6e#.x6fmeo38q
http://www.theverge.com/2016/5/18/11699122/google-allo-messaging-app-announced-io-
2016
http://www.techinsider.io/no-one-will-use-google-allo-messenger-2016-5
http://www.recode.net/2016/6/1/11826256/mary-meeker-2016-internet-trends-report
http://www.wired.co.uk/article/inside-facebook-messenger
http://techcrunch.com/2016/04/12/agents-on-messenger/
http://dangrover.com/blog/2016/04/20/bots-wont-replace-apps.html
https://marco.org/2016/05/21/avoiding-blackberrys-fate
https://stratechery.com/2016/googles-go-to-market-gap/