Campaign Asia-Pacific spoke to Shintaro Tabata, SVP and head of corporate sales for Line, about the company’s plans to offer greater utility to consumers and more options for brand involvement. The company seems to consider its messaging platform almost as a kind of operating system, an underlying platform that can 'run' useful apps for both brands and consumers—in many cases by communicating with enabled devices in the real world.
A major part of Line’s diversification programme is a partnership with Intel, which was officially announced in early October. The two companies agreed to collaborate on software development with a view to creating what they call “Internet of Things-enabled solutions”.
The first initiative under this agreement was the launch of photographic vending machines with a connection to Line, on behalf of Kirin. The vending machines are designed to provide entertainment to consumers of Kirin’s drinks by giving the option of novelty photos which then appear on their Line accounts.
Tabata said that while most of Line’s corporate business still comes from an advertising model, there is scope to do much more. “Big beverage makers like Kirin, Coca-Cola and Suntory are really important clients for us, but so far our relationship with them has been focused on advertising and media,” he noted. “Through collaborations like this, we aim for deeper relationships with them, not just as advertisers or publishers.”
He said the selfie photo functions were just an initial step. In the future, he suggested, consumers should have the option of ordering their favourite drinks before reaching the vending machine, for example. Personalisation will be a key element in terms of what Line offers its users. He said he envisaged vending machines with facial-recognition capabilities that are also able to ask qualitative questions about the products as a means of data collection.
The messaging app as control panel
Shintaro Tabata: Line can potentially reduce the need for the development of standalone apps by brands
On a broader scale, Tabata said messaging apps have the potential to serve as controllers for a wide range of devices, simplify use for consumers and provide a clearer channel for brand involvement. “Every device is going to be able to communicate,” he said. “At the moment you have to download each app [individually], which is really troublesome. Intel offers many IoT devices—digital signage, smart shelves—that are focused on the business and data side, while Line acts as mainly as a consumer touchpoint gateway. We think this combination can be really effective for brands … to bring a one-stop service.”
Recent examples of Line using its platform to offer utility include working with the Kansai Electric Power Company (Japanese language) to provide energy bills, updates on electricity usage, and alerts if they go above a pre-determined level. For the car dealer Gulliver, it developed Drive+ (Japanese language), a service that allows people to check things like the fuel level in the tank and how long a car has been parked at a meter.
Tabata also sees Line being able to provide real-time marketing such as coupons to someone on the way home from work wishing to buy a certain brand of beer from a convenience store upon arrival, and also informing them in advance should the product inventory run out.
The company’s ‘stickers’ are also becoming more useful. While not strictly an IoT initiative, customers of Mizuho Bank are able to use Line stickers to check their bank balance (Japanese language): sending a sticker generates an automated reply, which Tabata defines as a simplified version of SMS banking, which requires people to remember and input specific text commands.
Tabata said utility was not yet a feature of Line's international activities, but that he expected that to change depending on client demands, as well as technological advancement, which is of course at varying stages across Asia. "It's a matter of time," he said.
Tabata noted that the vast majority of branded mobile applications—more than 80 per cent—are “zombies”: “From a consumer standpoint, it is almost impossible to find them organically,” he said, citing Nielsen research that finds the average smartphone user only uses nine applications more than 10 times.
“Even for a major brand like Coca-Cola, it’s really hard to make a [native] app one of these nine. We think Line’s open environment could be the ideal alternative for having own-branded apps.”
Of course, there is still a role for native apps: complicated functions such as moving stock charts or 3D games, for example, are more suited to being standalone entities, he said. “But for ordinary companies, most can be described as very simple text or movies. We can handle these materials so you don’t have to have your own branded apps, and it’s easier to discover them and keep a certain activation level. In the initial phase, it’s much easier [for consumers] to become friends on Line than downloading native apps, which takes several minutes.”
Challenges to adoption
In the age of connected devices, there is clearly a role for messaging platforms to play in bringing marketing messaging and transactions closer together, but selling these services requires changing clients’ mindsets.
“Hopefully we can increase revenue around IoT services,” Tabata said. “We expect it could become a much more stable revenue source for us. From a brand standpoint, the view is that the switching cost is really high in this domain. I have to admit it can be hard to justify or propose the initial step. Compared with the typical advertising business, the timespan is different. This kind of service is a long-term proposal.”
Line's Q3 2015 earnings, released yesterday, show a 38 percent year-on-year increase in revenue for the company's core messaging app business to 29.9 billion yen (US$248.3 million).