From destination to conversation: How mobile is changing commerce in our phono sapien world

October 17, 2016 | Oisin Lunny

In 2016 we live in a mobile-first world, populated by what The Economist termed a new species of “phono sapiens”. We are glued to our mobile devices most of the time, and use these portable super-computers for so many sophisticated and essential interactions it is almost quaint to call them “phones”.

Mobile messaging is rapidly becoming a primary global communication channel, particularly for the highly valued millennial generation. Research is showing, time and time again, that today’s kids prefer to use messaging for most of their interactions, as opposed to the voice channels beloved of their parents.

But why text? And why now? SMS is not new technology but our global fixation with it is. SMS has a global install base of over six billion according to Portio Research, way more than email or any of the messaging apps. It works instantly and seamlessly on every mobile device on the planet, with no app installs or user training needed.

While we reached saturation point for mobile devices some time ago, we have only recently peaked in terms of app adoption. According to Nomura research the “app boom” is over, with US downloads declining 20% year on year. Indeed, globally the story of apps is largely the story of messaging; according to KCPB’s Mary Meeker six of the top ten apps globally are messaging apps. Business Insider echoed this by identifying that messaging app usage overtook social media usage on mobile devices in 2015.

But where does that leave the sophisticated phono sapien consumer? Ad-blind and app-fatigued. Advertisers have been using spray-and-prey broadcasting methods for too long, and too many brands have been offering a “destination” app-based experience rather than dovetailing with consumers’ more fluid expectations. But behaviors are changing; in the US you can now register to vote with a text message. Companies and governments alike are engaging with consumers where they are and where they want to interact, in messaging apps or by using the globally ubiquitous text-messaging channel.  This charts our move away from destination commerce towards a more conversational approach.

But, with billions of consumers globally engaging in these conversational channels, how can brands meet this demand for “non destination” ad-hoc interactions? Innovative brands are leveraging Artificial Intelligence (AI), machine learning and chat bots to harness the immense power of the ubiquitous mobile messaging channel, and offering 1-to-1 engagement on a global scale. Examples in messaging apps include Uber purchases nestling within the Facebook Messenger app, Getty Images hanging out in Skype, and Digital Genius’ AI waiting on call 24-7 for the SMS based interactions of Unilever’s virtual chefs and the “shopping PA” services of Awesome.

With the advent of conversational commerce it feels like we are at the beginning of the next evolution of mobile messaging. While person-to-person interactions seem to be shifting to a wide range of innovative OTT apps, effectively forming ad-hoc social networks with ecommerce benefits, SMS looks to be an increasingly useful tool for enterprises to connect with the modern consumer. Mobile users are not only able to connect with each other anytime, but can purchase anything, within reason, by using messaging. Mobile shoppers can be guided and served by AI driven contextual assistants in-app or by using AI driven SMS solutions.

Thanks to the evolution of phono sapiens, conversation is commerce, and conversational commerce is big business. Chinese OTT innovators WeChat generated $1.8 billion in mobile revenue in the first quarter of 2016 alone. WeChat facilitates a huge range of commerce opportunities for their 806 million monthly active users; they can make purchases, hail cabs or book hotels without leaving the social messaging app. Every WeChat user has a personal QR code that serves as a digital ID, and over half of their users have linked their bank accounts to its mobile payment system.

Outside of China many OTT apps are gradually following WeChat’s lead, for obvious reasons. According to Evercore Group LLC, if Facebook is able to capture even half the predicted business for customer support via messaging, including purchases within the messaging app, it would represent a $4 billion revenue opportunity for the company. Outside of the OTT ecosystem, conversational commerce is still big business. Nneka Chiazor, the VP of Public Policy & Government Affairs at Verizon, recently predicted that SMS would be a $50 billion dollar market by 2050, adding, “If you think SMS is dead you are dead wrong.”

What do you think? What’s next for the evolution of the phono sapien?

Join the GSMA and OpenMarket’s Oisin Lunny for a special webinar at 15:30 GMT on Thursday, 3 November 2016. Oisin will be discussing all of these issues, and much more. Click here to register for free, and join the conversation.

Oisin Lunny is part of the Market Development team at OpenMarket, providing mobile engagement solutions for global Fortune 1000 companies. Oisin has spoken at over 100 conferences, contributes to The Guardian, and was named the #5 most engaged marketer in the UK by LinkedIn.

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