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2017 Predictions: B2C Messaging and Chatbots

App Annie

We expect B2C Messaging to grow in 2017 even as the impact of chatbots remains limited.

We believe business-to-consumer (B2C) messaging will grow in 2017, even as the impact of chatbots remains limited. In our recent post, 2017 Predictions for the App Economy, we outline 10 trends expected to have a huge impact next year.

Chatbots — or automated conversational agents — have been around for a few years. However, chatbot hype only took off in early 2016 when major social and messaging companies began investing in the area. Their reliance on artificial intelligence (AI), as opposed to prerecorded responses, generated a lot of excitement in the industry. Much of this was centered around the concept of “conversational commerce” — i.e., the ability to transact or make purchases using a conversational interface — usually within a messaging app. The premise behind this was that chatbots would enable a frictionless experience as users would not need to open or download another app. But by the end of the year, it became clear that expectations were far higher than existing capabilities could deliver.

It is very likely that the efficacy of conversational interfaces has been overstated, and the very existence of the on-demand economy is a testament to this. On-demand ridesharing and food delivery startups have grown exponentially in part because they replace conversation with a graphical user interface (GUI). Instead of contacting a restaurant or taxi company directly, users can simply place an order with a few taps on their smartphone. With an app-based GUI, all possible options are presented on screen which makes user decision making easier. In effect, this implies that conversation adds friction to commerce rather than taking it away.

While chatbot intelligence remains limited for now, messaging still has a major role to play in helping businesses deliver great consumer experiences. But this can only occur by making existing conversation more efficient, rather than inserting conversation where it does not currently exist.

Using this as a lens, messaging apps clearly have the potential to transform customer and after-sales service. Today, much of this is still managed through call centers, which requires customers to take time out from their day to deal with. Handling requests through messaging apps allows users to communicate with customer service representatives in an asynchronous manner, (i.e., starting and continuing the conversation as per their convenience). Likewise, it allows customer service employees to handle multiple requests at a time which has the potential to reduce costs. Chatbots can still play a role, but artificial intelligence capabilities will not be sophisticated enough to carry on complete customer service conversations in 2017. Instead, chatbot use cases will remain limited to notifications and routing users to the right human touch points.

Facebook is likely to lead the charge in B2C messaging through increasing integration of Facebook Pages with Facebook Messenger and WhatsApp Messenger. Each of these messaging apps had approximately one billion monthly active users in December 2016. Together, they cover a majority of the global messaging app market outside East Asia, which will minimize implementation challenges. This will help fast-track B2C messaging adoption and will result in yet another domain transformed by mobile apps, with many more to come.

Want to learn more? Read about our other predictions for the new year.

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Notes:

  • App Annie Intelligence is currently available for the iOS App Store and Google Play. It does not currently provide estimates for other app stores, such as the Amazon Appstore. While iOS and Google Play represent a significant portion of the app market in many countries, that is not the case for some countries. For example, China has a number of sizable third-party Android app stores.

  • App Annie Usage Intelligence data for smartphones and tablets were derived from mobile usage data collected from a large sample of real-world users, combined with additional proprietary data sets.

  • App Annie tracks usage at the device level using a privacy-protective hashed device ID. Data is only reported to third parties in aggregated format.

  • Certain trademarks and/or images used in this report may belong to third parties and are the property of their respective owners. App Annie claims no rights to such trademarks or images.

January 20, 2017

Mobile App Strategy

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