Mobile Commerce

Chatbots And The Future Of Facebook Messenger

Until about a couple of weeks ago, bots were mostly thought of as the last four letters of a word that began with “ro” and a concept that even Alphabet decided might not be ready for prime time.

Well, that is unless you’re in Japan where robots – dinosaur robots to be precise — are now acceptable substitutes for hotel reception staff. Who knew — the next big thing in hospitality, checking in via raptor.

Bots are nothing new, in fact.

They’re software programs that make performing repetitive tasks simple and fast – way faster than human beings could ever do. Some people use bots to make tasks simple and fast – and nefarious. For example, botnet-induced traffic is responsible for 54 percent of the eyeballs to display ads on the Web, burning a $6 billion hole in advertisers’ pockets for eyeballs that aren’t and will never buy.

Sophisticated cybercriminals have also used botnets to release denial of service attacks on sites and steal personal information, including bank account numbers. Remember ZeuS? In fact, we’ll reveal a new study soon that will document that botnets have become the No. 1 source of online fraud.

But the announcement last week from Facebook is intended to unleash a kinder, gentle – and more social – sort of bot.

CONVERSATION, CONTEXT AND CONTROL

Facebook – through Messenger – is going all in on chatbots as a tool to engage consumers and give businesses new tools to reach them. Its chatbot platform, they hope, will spawn an ecosystem of developers who will find a variety of use cases to make bots a better (and more lucrative) use of their time then developing apps for the Apple and Android ecosystem.

Hey brand, want a better way to engage with your customer? Find a developer and let them grab Messenger’s bot API. Then you too can have a presence in an ecosystem with a built-in audience of 900 million monthly users.

Chatbots will leverage advances in artificial intelligence to make the human-to-machine interactions inside of that ecosystem both conversational and natural. As Messenger chief David Marcus told The New York Times, “We’re conversational creatures …That’s the way our brain functions.”

And Messenger and Marcus’ big bet is that its chatbots will provide a mechanism for brands to strike up those conversations with their community faster, cheaper and as well – if not better – than a live person can do now.

All inside the Messenger platform.

Which makes their move into bots less about the chat and more about the ecosystem that they hope to create – and control – using it.

WHAT’S OLD IS REALLY NEW AGAIN

The notion of conversational human to machine interactions isn’t all that new either. The English computer scientist and mathematician, Alan Turing, believed that computers had the capability to “think” like humans and converse with them without a human on the other end knowing that the “person” they were “speaking” with really wasn’t one. His Turing Test was the threshold for whether a computer could, in fact, mimic human intelligence. Turing believed that “teaching” computers to “think” begins with basic child-like interactions, made richer as computers were “taught” more context based on more interactions. The broader the context, the more complicated it is for machines to “master” those conversations, the more narrow, the more straightforward. (For more on Turing you can read the book “Enigma” or go watch “The Imitation Game.”)

Chatbots are very much in beta today – and still somewhat very rudimentary in their interactions, as Microsoft can attest. Microsoft, too, is doubling down on chatbots and its CEO believes that they will soon displace apps as the enabling platform for organizing and accessing information.

But as their first public foray into that world with Tay shows, there’s a lot for these chatbots to learn – or, in Tay’s case, unlearn. Tay was a very bad girl when she was first introduced to the world and is now grounded until she can learn to behave in a much more respectful fashion.

My own experience with one of Facebook’s chatbots, Hi Poncho (the weather chatbot), was a bit like dealing with a petulant child, too.

I never did get the answer to what I thought was a simple question on Saturday afternoon: “What’s the weather going to be on Monday, April 18, for the Boston Marathon?” But I was amused – at first – by the funny hipster cat banter, until I got annoyed when it was clear that Poncho was not able to answer my question and gave me the runaround.

I stuck with it for about 4 minutes, because I wanted to get the experience, but most people are probably not that patient. Going to my Weather Channel app is more accurate and faster, but admittedly not as entertaining. Once Poncho can match accuracy with his fun hipster cat banter, maybe I’ll give him another try.

But the bigger point here isn’t whether Messenger can perfect the hipster cat weather persona. It’s whether chatbots are its onramp to controlling an ecosystem that makes relevant information easier for people to discover and consume.

Here’s why that’s a pretty big deal – and may be a pretty timely move.

FACEBOOK BETS BIG ON MESSAGING

Of course where consumers are having conversations these days is inside of messaging apps and via text. Who needs to talk to anyone anymore when a text is just as good? And who uses Facebook itself anymore to really communicate with their friends? Even if you tried, your message would be buried in a fusillade of ads in the newsfeed.

eMarketer says that 75 percent of smartphone users use messaging apps at least once a month – usage that has spiked considerably over the last five years. Smartphones just make texting as easy as typing. Businesses use it as a way to communicate too. Everything from flight status to shipping updates come now via SMS. Consumers use it as a way to connect with friends and make plans, something that Zuckerberg and Facebook increasingly saw as a threat to its core social networking platform.

In 2014, Facebook began to do something about it.

Facebook’s $19 billion acquisition of messaging platform WhatsApp – a messaging platform that lost $138 million the year before — was its first step to both extending its footprint into messaging and preventing someone else from getting control of that asset. Facebook’s stock jumped 20 percent in the months after the acquisition was announced.

Shortly thereafter, Facebook spun out Messenger, which wasn’t doing much of anything within Facebook, and simultaneously hired former PayPal CEO David Marcus, to further fortify its messaging ecosystem.

But unlike WhatsApp, which has not been the object of any significant attempts to make money, Messenger and Marcus have channeled their inner WeChat muse to develop – and monetize — its own social network inside of a messaging platform. WeChat, with 650 million monthly active users, is the most influential social network in China. It’s almost exclusively where Chinese consumers communicate with each other. Businesses can be part of WeChat too and can advertise their products or services directly to consumers.

I’m told by my colleagues in China who use it regularly that WeChat is not a place to discover things like a search platform, but a place to get relevant information from brands that consumers request updates from. They also tell me that they use separate apps outside of WeChat to buy tickets, products and order taxis, etc.

Tencent, WeChat’s parent company, has been very careful about how it’s introduced schemes to monetize its 650 million monthly users. Gaming is the predominant way that its revenues are earned today and they are contemplating other ideas now.

Job one was to amass a ton of consumers and get them using it regularly.

Job two is devising ways to monetize that engagement that aren’t ad-based and pushed out, but at the permission of the consumers and pulled through.

Messenger appears to be taking a page out of that playbook – with chatbots and its latest play to engage brands, users and leverage one of the most powerful forces in digital today: apps.

THE MOVE TO MOBLE AND APPS AND MESSENGER

Consumers love mobile.

Worldwide smartphone penetration is approaching 60 percent. In the U.S., comScore reports that 94 percent of those 18-24 years of age own a smartphone, 93 percent of those 25 to 34, 84 percent of those 35 to 54 and even 58 percent of those over the age of 55 do as well. If you want all the scoop on the massive move to mobile, read this piece by MPD Founder David S. Evans and a couple of his economist colleagues.

comScore also reports that 62 percent of time spent online is spent on mobile phones – not a surprise.

Consumers also love apps.

Mobile apps drive more than half (54 percent) of time online, a trend that accounts for two-thirds of all growth in digital media. On average, consumers use 25 apps a month but download many more over the course of the year that languish on the mobile’s home screen, unused.

But here’s the big news.

Consumers really only use 3 apps: Facebook, Messenger and YouTube. Those three apps account for 4 out of every 5 minutes on mobile.

That means that those other 22 apps aren’t getting a lot of eyeballs – and it’s getting increasingly harder for new apps to break into that top 22.

Unless, of course, you can figure out a way to get your app inside of an ecosystem which gets a lot of eyeballs already.

Like, say, Messenger.

NEXT-GEN CHATBOTS

Chatbots are Messenger’s initial step toward a much bigger end game than simply making it possible for consumers to check the weather from Hi Poncho, get news headlines from CNN and order flowers from 1-800-Flowers. Messenger’s chatbot V.1 is about getting consumers used to thinking of Messenger as the place they can go to interact with brands – a one-stop shop for talking to their friends and the brands they like or want to get to know.

A place where they can initiate that engagement and not be served ads, like they are now on Facebook.

Chatbot v.2 though is where it could get interesting.

Messenger, I think, is hoping to parlay the consumer’s love affair with messaging and mobile, time spent inside of Messenger’s ecosystem, and brands’ concerns over consumer app fatigue into creating an “uber” platform that simplifies access to relevant information. The play, potentially, is to create an interface inside of Messenger that gives consumers access to what they want without having to wade through or download hundreds or even thousands of apps – which consumers just don’t do anymore.

The bet that Messenger is making is that consumers will want to do that inside of messaging – and specifically inside of Messenger, because that’s where conversations among consumers happen today.

And where conversations with brands can happen tomorrow.

Creating a sort of a “your information wish is my command” center with an easy to use interface to make it seamless, efficient and comprehensive.

It’s a big bet. But not an implausible one.

For the bet to pay off, Messenger will have convince consumers that Messenger is that hub for all of the information that’s relevant to them – instead of one of their 22 favorite apps.

Or one of the other players lining up to do the same thing.

THE GROWING RISE OF THE CLOSED ECOSYSTEM

Making closed ecosystems – aka walled gardens – more useful so that consumers stay comfortably ensconced in them is in vogue.

Apple, the undisputed king of closed ecosystems, has said that it will soon make apps searchable. Siri today uses voice to help iOS users do and find things easily.

Google with Google Now and Play (one of the Top 10 apps on mobile in position No. 6) and Google Voice is leveraging the strength of its massive search ecosystem to do the same. It’s open in the sense that Google can be accessed everywhere. But it would like to make everything that you want to do happen inside of a Google app that can be accessed anywhere – Google, Android, Windows – you name it. Messenger’s 900 million active users each month sounds pretty incredible until you consider that Google sees 100 billion searches every month.

Then there’s Amazon’s Alexa, which is using voice and a growing ecosystem of developers to create skills intended to make Alexa and Amazon ever more consumer-friendly, too. Alexa and its growing repository of information and services coupled with Amazon and its growing roster of merchants and consumers puts a commerce spin on its ecosystem. Amazon, all by itself, is the No. 1 retail app on mobile (with 172 million visits a month) and brings with it engagement via its 300+ million plus accountholders who are ready to buy — and from a variety of merchants that now include luxury designers.

Whether chatbots ignite a powerful closed ecosystem for Messenger remains to be seen.

But step back and think about what Facebook has managed to pull off and what its future could hold if its messaging app bets pay off.

After being slammed for being a mobile luddite following its bungled IPO in 2012, Facebook has managed to become the Godzilla of mobile apps, making more 80 percent of its humongous ad revenue on mobile.

Then, it managed to get control of the two largest messaging apps in the world, outside of China, with WhatsApp and the spin out of its Messenger App – at the exact same time when lots of people, particularly millennials, were shifting into messaging.

It’s creating a parallel universe for Facebook with messaging in which all the communication between people and businesses will be within its walls.

With chatbots ruling the roost.

If they’re successful, then all they’ll need to worry about is how Apple might react to hosting such a powerful closed ecosystem inside of its own – since it has similar intentions. Perhaps that’s why one of the other things that Facebook announced last week too was its hire away from Google to lead a hardware division.

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