OTT (Over The Top) mobile messaging apps have recently garnered significant attention thanks to Facebook's acquisition of WhatsApp for $19B back in February. But what everybody is really dying to know is exactly how these app companies make money -- what are the revenue streams?
While all offer free or nearly free messaging (and potentially calling) for consumers, at the end of the day someone needs to pay the bill. There are a lot of companies vying to prove that they have an answer to the revenue conundrum, but Salesforce’s recent partnership with LINE has, in my opinion, the most interesting potential. Through this deal, marketers will have a way to directly connect with customers. This is a massive step toward the one to one communication holy grail that is custom tailored to fit consumers’ interests and preferences.
Other messaging apps like Kakao Talk and WeChat are trying to find ways to make money through additional services like video games. The biggest challenge for those apps is to ensure that efforts to generate revenue don’t jeopardize their appeal as communication and social networking tools. While some messaging apps offer advertising features, WhatsApp in particular has sworn off advertising anytime in the near future (I guess a $19B payday gives you some latitude to make bold statements like Facebook …).
What's About to Change?
However, the recent Salesforce/LINE deal is not about advertising. It is about modern marketing. People will connect with a brand (just like a friend) and be able to communicate on a one to one basis. This makes it possible for OTT mobile messaging apps to become an application to person (A2P) messaging channel like SMS, MMS and Push Notifications are today. LINE is allowing brands to participate directly in their native app experience for the mere price of $25,000 per year (OK, so maybe it is an extremely expensive friendship).
Brands will need some tools to communicate with their “friends,” and this opens up a new revenue stream for the cross channel messaging players. Agencies and CRM shops are likely all feverishly trying to learn these channels so they can have a perspective by the time their clients start asking how to take advantage of this marketing opportunity.
Being in the cross channel messaging space myself, this is a very exciting, and also very scary change. Why is that? Consider these questions:
Which Apps Will Open APIs to Businesses for Marketing Tools?
Technology firms don’t have unlimited resources, so integrating with five or more new potential channels is not a small task. Each one will have its own set of challenges, but every new challenge presents an opportunity. I guarantee companies will develop an aggregation layer to make this easier. I predict that a new set of software companies will evolve to address this challenge in due time.