Chatvertising: Finally, A Way in Which Social Media and Advertising Can Profitably Interact?

Talking to an advertisement in the shape of a chat-bot? I mean, sure, we've done weirder stuff online - most now hopefully deleted if not destroyed  - but given the frustrations evinced by both consumers and advertisers at the nexus of social media and commerce, maybe only something truly out of the ordinary will work.

The impetus for this approach is the employment of chat bots to stimulate brand engagement. The bots are already popular with teens and young adults, the favored demographic for such experimentation.

The notion is that interaction may prove more profitable than derivatives of traditional talking head advertising, especially given the growing prevalence of mobile as the platform du jour. 

The challenge will be in perfecting the technology and in addressing concerns that the potential for intrusion and manipulation not interfere with the commercial appeal.

Similar approaches in China and the US provide encouragement. The dissatisfaction with the growth and connectivity of advertising in mobile social milieu provide incentives to innovate. There is a will, but it will take time to determine if there is really a way. JL

Christopher Mims reports in the Wall Street Journal:

Chat bots built by brands can be used for entertainment, but they can also be used to inform; imagine conversing with your bank or utility company's bot when you have a customer-service question.

This month, with little fanfare, the most popular chat app among teens in the U.S. launched a feature that could be the future of advertising. Or, at the least, it marks the dawn of a new age in how brands engage.

People conversing directly with brands via bots. I call it chatvertising.

I can hear hisses from the peanut gallery already, and you could argue advertising is the last area of human endeavor where we need more innovation. But what if the metaphorical "conversation" marketers always claim to be having with us became literal?

Kik, a chat service like WhatsApp or Facebook  FB in Your Value Your Change Short position Messenger, claims that four in 10 U.S. teens are active users of its service. And now, thanks to the application of a decades-old technology—the chat bot—those Kik-using teens are having something like actual conversations with a half dozen brands, including Moviefone, Funny or Die, and the Kik team itself.

Here's what's going on: In the mid-1960s, MIT professor Joseph Weizenbaum developed a computer program called ELIZA, which could engage in open-ended conversation with a real human being. Over time these chat bots have gotten better and better at interacting with humans, mostly because programmers have loaded them up with knowledge about the real world. They can also learn from their conversations, becoming ever more skilled at fooling us into thinking that they, too, are intelligent.

Thanks to the rise of chat apps—WhatsApp has 500 million users world-wide and agreed to be purchased by Facebook Inc. for $19 billion in February, and its competitors in Asia are no less popular—there is finally a place in which smartphone users are spending their time where a chat bot might be a good fit. And transforming inanimate objects—"brands"—into things we can converse with, is what Ted Livingston, founder of Waterloo, Ontario-based Kik has in mind.

"If you could chat with a brand in the same way you chat with a friend, that's powerful," says Mr. Livingston.

If it all sounds a bit far-fetched, consider this precedent from Line, a chat app from Japan with 400 million registered users. In October 2013 Paul McCartney's handlers registered an account on Line, and paid the company to create "stickers," which users exchange on chat apps and are so popular they have become a major source of revenue. To get the stickers, users had to opt-in to Mr. McCartney's Line account that "chats" with its followers by sending them updates about the singer.

Mr. McCartney has 2 million followers on Twitter, but on Line he has 9.3 million. Kik's vision is to take this model and go one better: What if Mr. McCartney (or his handlers) wasn't just talking at his fans, but actually conversing with them?

Presently, Kik's chat bots are primitive. The one run by the Kik team itself will tell jokes and is the closest to simulating actual conversation, while the ones belonging to brands can respond only by pushing more content at the user. That's deliberate, says Mr. Livingston, as there is some worry at this stage in the development of the technology that a more autonomous chat bot might start saying things that could damage a brand.

Chat apps are enormously popular outside the U.S., where carriers' practice of charging users for every text message they send provided a powerful incentive to use the free apps. But there has always been some question about how they would make money. WhatsApp, for example, doesn't carry advertising, and Mark Zuckerberg has declared his intention to keep it that way. And WeChat, which has 400 million users, mostly in China, severely restricts how often advertisers can reach out to users.

Simply spamming users with ads in such an intimate space won't work. Part of the problem is that until now, it hasn't been clear what a "native" advertisement in a chat app looks like. Yet in the first week of offering its "promoted" chats, 1.5 million people opted in to one of the campaigns, according to a Kik representative. And Kik's own chat bot, which began as an experiment and has been running for years, gets 1.8 million messages a day.

If it seems improbable that so many teens—80% of Kik's users are under 22—would want to talk to a robot, consider what the creator of an award-winning, Web-accessible chat bot named Mitsuku told an interviewer in 2013.

"What keeps me going is when I get emails or comments in the chat-logs from people telling me how Mitsuku has helped them with a situation whether it was dating advice, being bullied at school, coping with illness or even advice about job interviews. I also get many elderly people who talk to her for companionship."

Any advertiser who doesn't sit bolt upright after reading that doesn't understand the dark art of manipulation on which their craft depends.

Chat bots built by brands can be used for entertainment, but they can also be used to inform; imagine conversing with your bank or utility company's bot when you have a customer-service question. And the ones Kik is working on can learn, says Mr. Livingston.

So imagine this scenario, which is a version of what Mr. Livingston says his team aspires to: Taco Bell wants to roll out a new flavor of Doritos Locos Tacos. Maybe this one is "X-tra spicy," and it has the personality and verbal tics to match. Fifty or so brand representatives, real human beings, could have chat conversations with customers at the outset, and the chat engine would learn from those interactions, gradually becoming more autonomous, until it could automatically handle thousands of simultaneous conversations.

This is what native advertising in chat apps looks like. And chat apps, we keep hearing, are the future of social media. Mark Zuckerberg, are you listening?