In late 2015, consumer use of messaging apps overtook social networks as the primary use for the smartphone, already the primary computing device for most Americans. In fact, a survey commissioned by my employer found that over 69 percent of consumers preferred communicating with customer service using a messaging app instead of having to call.
Yet, despite this growing trend, US businesses have been very slow to adopt messaging as a channel — perhaps because no single platform has emerged as the clear front-runner for combining brand and consumer messaging.
That could be why, in between designing driverless cars and championing new uses for VR, Google and Facebook are competing to be the platform that owns business-to-consumer messaging.
China’s WeChat Rewrites the Messaging Playbook
Meanwhile, WeChat has cracked this code in China. What WeChat has achieved — and what major platforms like Google and Facebook are pursuing — isn’t just messaging at a massive scale, but transactional messaging: the ability to provide goods and services via messaging, instead of limiting messaging to uses that only streamline communications.
WeChat’s scale is simply unparalleled, making it almost impossible to do business in China without touching its platform. In fact, the numbers for the Chinese market are mind-boggling in general: According to the China Internet Network Information Center (CNNIC) in a report cited last year by the Wall Street Journal, more than half of China’s nearly 1.4 billion people are online and 90 percent of them get there using their smartphones.
What’s more, a total of 357 million Chinese used mobile payments in 2014. And according to eMarketer, over 195 million Chinese consumers used mobile proximity technology last year, compared with only 37.5 million in the US.
Search Versus Social Means Google Versus Facebook
WeChat started with mobile payments. Then, once consumers were hooked, WeChat built its mobile payments capabilities into a host of other services, creating enough momentum to hit critical mass. From there, popular businesses had no choice but to hop on board.
Google and Facebook have built similar ubiquity in their respective markets and are now eyeing the stateside opportunities inherent in transactional messaging. Both companies control their own portals, but there are key differences in their approaches.
Multiple Platforms but No Social Graph
From its position of search market dominance, Google has released multiple distinct consumer communication platforms, from Android Messages, Hangouts, Duo and Allo, to Gmail’s recently rebranded Gchat feature, now consolidated into Hangouts. It also recently launched its latest ad extension, Google Click-to-Message, which makes it possible to search, click on an ad and text with a brand directly.
But while Google has successfully turned its name into a common verb, no one is living their online lives inside Google the way we are on Facebook. Facebook has conquered the social market, and even more critically, the social graph.
Facebook Is Positioned to Lead
In the US, that means the user’s identity can be somewhat reliably authenticated. Facebook catalogues individual preferences and habits within its site, creating online personas for individuals that include intimate details of daily life.
In addition, Facebook’s own research projects that 67 percent of consumers expect to message businesses more over the next two years.
Now that Facebook Messenger and WhatsApp have surpassed 1 billion monthly active users between them, Facebook’s depth of information is unmatched in the social world. This dominance of the social graph leaves Facebook well positioned to take on the mantle of transactional messaging in the US.
In April of 2016, Facebook announced it was turning its Messenger app into a singular location that allows media outlets, retailers and brands to chat with users. For businesses who are looking for more visibility, the fact that consumers already have Facebook in their pockets and are checking it several times a day — or an hour — makes a compelling argument for meeting consumers where they are.
Don’t Count Your Chickens
Even with widespread appeal and the building blocks for transactional messaging in place though, market dynamics and consumer behavior are very different between the US and China, making it unlikely that either Google or Facebook will achieve WeChat-style winner-takes-all monopoly status anytime soon.
Right now, that’s largely because American consumers are simply not being conditioned to use messaging in transactional ways. For example, Everlane recently paused its program of messaging with customers via Facebook and Twitter has abandoned its buy button.
Even more important is the fact that large American brands, already under pressure to differentiate themselves by providing unique experiences to customers, are wary of being disintermediated by a behemoth like Facebook. They’d rather develop their own properties such as branded apps, rather than hand over the keys to their customer base to a tech giant.
Don’t Forget About Snapchat
Yet, with email past its prime, it’s a matter of when, not if, messaging will grab a much larger share of communication between brands and consumers.
And don’t count out the dark horse in the race, Snapchat, which dominates among younger US demographics as the day-to-day messaging tool of choice. Snapchat has recently made a number of moves to become a more typical messaging app and post-IPO, the company will face intense pressure from Wall Street to monetize its user base. Transactional messaging with brands is one route Snapchat could pursue.
Bottom line, transactional messaging will be integral to the future of doing business across the globe, and American businesses are just catching on to a powerful and as yet, mostly unexplored channel.