How Kik is using chatbots to monetize mobile messaging

Pat McCarthy, SVP Product Management, Publisher Technology Group, AppNexus 

There is no question that advertising is the power source of the open internet. In the absence of quality advertising, great journalism, music, film, games and culture will either disappear behind a paywall—thus making the Internet closed and, quite literally, unfree—or disappear completely.

Building a better Internet means helping advertisers deliver the right message to the right audience at the right time and cost; empowering publishers to monetize their content; and enhancing the online experience and choices of end consumers. This cycle enables content producers and internet service providers to hire journalists and developers. It’s a virtuous cycle that we need to perpetuate.

This week I chatted with Josh Jacobs, President of Kik Services at Kik Messenger, the leading messaging service and mobile-first viral sharing network used by 40% of U.S. teenagers. As an ad industry veteran who is now responsible for growing the partner ecosystem powered by Kik’s chat platform, I wanted to learn about Kik’s strategy for building audience engagement and monetizing its popular mobile app. I was particularly interested in its use of automated “chat bots” designed to simulate real conversation with brands and publishers.

Pat McCarthy: What is Kik’s business and what are its key growth drivers?

Josh Jacobs: Kik is a chat platform. We seamlessly connect teens with friends and with the brands, entertainment, games, and news they love.

You only need a username to create a Kik account, and you don’t have to share your phone number, so we are popular with teenagers, many of whom didn’t have their own phones at a young age. In the last couple of years, however, Kik has been evolving into a platform, so users can enjoy more features and experiences – including bots – right inside the chat.

PM: How have you been able to differentiate your business?

JJ: With the core chat features, Kik is different because of its emphasis on usernames rather

than phone numbers. Phone numbers don’t make sense in an age of messaging – they’re a relic from the landline era. People are better able to control their personal details and private information by not having to share their phone numbers. We’ve found that

this advantage has helped people connect across communities, whether online or offline, without fear of disclosing more about themselves than they’re comfortable with.

PM: Chat bots are a prime example of native brand engagement and monetization. What should readers know about this strategy?

JJ: Beyond the core experience, we’ve started building a healthy ecosystem for developers and

brands, with a particular focus on bots. Bots on Kik are easy to find through our Bot Shop and spreadable through unique-to-Kik features such as invites, mentions, and Kik Codes, all of which offer viral potential. We’re still in the early days of building this ecosystem, but it has been great to work with the more forward-thinking brands and developers who are willing to explore this new world together.

PM: How do brands and agencies work with chat bots?

JJ: Chat bots offer a new creative canvas for brands to engage with younger audiences. We generally measure engagement with chat bots in minutes rather than seconds and often see engagement that spans multiple sessions. Users commonly exchange dozens of messages – or more – with a bot. Coupled with the ability to distribute content within a bot, brands and agencies are starting to see new ways of engaging Generation Z consumers. The feedback we’ve been getting from brands is that they find Kik easy to work with. We have a growing roster of partners who can help conceive and build bots, and our partnership team is always available to help create unique and meaningful experiences for messaging.

PM: Where do you see the market going in the coming years?

JJ: As the popularity of the likes of Kik, iMessage, WhatsApp, and Facebook Messenger are proving, messaging is only becoming more central to people’s lives. We have known for a long time that chat is the killer app for mobile, and we expect that people will continue to spend the bulk of their digital time in chat apps.

When it comes to advertising, we think brands will find more and more ways to improve the

chat experience, especially by enhancing chat-based communication through things like GIFs, stickers, emojis, and bots. Of course, that’s good news for Kik, especially given our audience of hard-to-reach American teens. We’re going to continue working with the likes of AppNexus to fully unlock this opportunity in the programmatic space.

PM: How do you see Kik evolving in this space?

JJ: We are constantly striving to build a better chat product, which includes everything from response times to expression features, and we will continue to iterate on our bot-based ecosystem. Even though chat apps have been around for a few years now, there’s still so much room for innovation. It’s an exciting space to be in, and an exciting time. There’s lots more to be done.

PM: How are you monetizing your chat app?

JJ: We’re pioneering new advertising formats that are native to messaging. We’ve found that AppNexus’ open platform is a great canvas for innovating in ways that fit into the existing advertising ecosystem but that also stand out by delivering the amped-up engagement opportunities that are unique to messaging.

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