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Think Mobile: The “great migration” from traditional PCs to mobile devices has created a completely new universe. The numbers are breathtaking. In mid-2017, China officially had 1.36 billion mobile Internet subscribers, which was more than one device for every adult. Smartphones are widely used to interact with brands. Over 500 million Chinese made purchases online with their smartphones last year. In India, one in four consumers is already making online purchases. With 480 million smartphone users, mobile consumption has already become the biggest driver in e-commerce. This is described in detail in our new Springer publication “Successful brand building in the large emerging markets” (written in german) by Dr. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).

The television as “First Screen” has been replaced

Although growth rates on the Internet and in mobile communication are already declining on a global average, they remain high in the major growth markets thanks to the still expanding middle class and new consumer groups in the rural hinterland with its megacities. The consequences of the boom in mobile devices are far-reaching. In the young markets of the world, smartphones have replaced the traditional television (and thus the programs running there) as “first screen”.

Mobile consumption forces a new way of customer communication

This has an enormous impact on purchasing behavior, pricing and the way brands need to communicate with their customers. According to the analysis specialist FICO, China and India are already among the leading countries with the highest percentage of consumers using mobile devices. France and the US have the lowest rates in this area. The figures contain a clear message for brands. If you want to benefit from the purchasing power of major emerging markets, you can achieve astonishing growth rates if you consider the mobile communication channels and customer experiences to drive up sales.

Large Western companies such as Unilever and BMW have been implementing extensive marketing initiatives in the mobile sector for some time to exploit the extraordinary growth of mobile communications in these new markets. There is no doubt that mobile devices have become a central means for brands and companies to connect and interact with their customers. Today, a state-of-the-art mobile website with a well-functioning e-commerce integration is more important than a traditional website.

Rural regions can now be developed much better

The ever-expanding mobile universe provides marketers and brand companies with a powerful additional tool for tapping into massive customer groups in rural areas that were previously difficult to reach at reasonable cost. Booming domestic Internet giants such as Alibaba and Tencent have helped to build up dense distribution networks that can reach even the remotest corners of continent-sized markets and deliver goods virtually anywhere in two days at the latest. Many marketers have now begun to turn to the mobile sector, which they had previously often obstinately neglected. In the face of fierce competition between domestic online retail giants, the situation is currently improving rapidly.

Mobile presence has become indispensable

Against this background, there is a clear need for companies to become active in the mobile sector. The Chinese online auction house Alibaba, whose huge C2C platform is using the “Singles Day” on 11 November for a “Shopfest” campaign, shows how this can be achieved. Alibaba transformed “Singles Day” into the Chinese equivalent of Valentine’s Day. At the “11.11 Shopping Festival 2017” Alibaba set a new daily record for online consumption with 25.3 billion dollars. There is no better way to illustrate the purchasing power of mobile consumers in the major growth markets. Almost 43% of sales at the latest “Shopfest” were generated with customers using mobile devices.

The internet alone is no longer futureproof. Omni-channel shopping is the way forward – shopping on all virtual and analogue channels. However, only very few retailers have plans for this.

On the one hand: Online shopping is booming like never before. In the last year, turnover in Germany increased by 12.5 percent to almost 54 billion euros. A further increase of 11 percent is expected for this year. On the other hand: The stationary retail business is buzzing. The fashion industry, for example, had its best September in 17 years.

Apart from the fact that German citizens are keeping the economy running with a generous desire to buy, above all this means that: All the projections suggesting that we will only order things online within a few years’ time are false. The term omni-channel shopping, shopping via all channels, has long been an integral part of the retailer’s vocabulary – at least since the online giant, Amazon, began to infiltrate the real shopping world. Amazon has taken over the American organic food store chain, Whole Foods, and is opening its own supermarkets and book stores. For most retailers in Germany, it seems that setting-up an online store would be enough to be able to survive despite all the new and powerful competition from the web world. Unfortunately it’s not.

It is only a matter of time before Amazon expands to Germany with its physical shopping world. No company relentlessly infiltrates the lives of customers with its services and devices like this retail giant, with an annual revenue of 136 billion dollars – the trend is on the rise. And it is by no means the only online retailer that wants to settle in the shopping streets. Europe’s biggest online fashion retailer, Zalando, is also considering opening shops and the online furniture stores, Westwing and Home 24, have already done it.

They are no longer two business worlds that run side by side, the virtual and the real. They are now visibly overlapping. Successful e-commerce needs stationary trade – and vice versa. However, only those that manage to combine them in harmony will reap the benefits. “E-commerce is becoming more and more physical, accessible and offers a more intense experience, while physical trade is drawing nearer to the web in many ways: It is becoming more interlinked and data driven,” explained Dough Stevens, founder of the consulting company, Retail Prophet, whose client list includes names such as Coca-Cola, Disney and Google. “New technologies are speeding up the development of both channels. The line is becoming more and more blurry, and at some point, we will not be able to say with certainty whether the buying experience is digital or physical.”

Nowadays, customers are well-informed, demanding, price-conscious, impatient and lazy. They want to shop as they please. For traditional retailers, this means: They have to be involved in all channels that the customers may potentially use – shops as well as the traditional catalogue, plus online, mobile and dialogue all the way through to smart TV. However, not many have managed this so far. 90 percent of German companies do not have an integrally networked digitisation strategy. This could be their downfall when it comes to omni-channel shopping.

For many, it’s all about mobiles. For the largest players in the USA, the revenue share of orders via smartphones or tablets is already between 60 and 70 percent. Mobile phones are by no means just a shop window for retailers. “Speed and convenience are essential to a shopping experience and determine success or failure,” said Gerrit Heinemann, manager of the eWeb Research Center at Niederrhein University of Applied Sciences. For example, for retailers this could be an app that alerts customers when the product arrives and lets them know where there is a parking space available. And in the shop, the customer can pay for their goods via the app without having to go to the checkout.

If possible, they would like to have the goods conveniently delivered to their home in the evening, instead of dragging bags around. In some cities in Germany, Amazon has the Evening Express, Media and Saturn offering delivery within three hours, while Deutsche Post works on a Same-Day-Delivery standard for all others. Such operations also work on a small-scale, as the example of Kiezkaufhaus in Wiesbaden shows: Local retailers present their products on the website. The customer orders online and the product is delivered that evening by bike courier. 80 percent of the orders are food stuffs and there has never been a return.

Of course, the physical shopping experience – with an emphasis on experience – is completely lost. It is high time for an upgrade. Department stores and brand shops may be livening up their shop floors with gastronomy, but this can only represent a stepping stone. Tomorrow’s shop will offer completely new worlds of experience driven by the technological development. For example, a few years ago, Burberry established virtual mirrors in its flagship store in London: If you hold a piece of clothing in front of it, the mirror shows you what it would look like on.

The shop is a showcase for innovations. This will mean that it will be possible to present products in the future that are not yet on the market, but that the customer can alter to their needs by means of configuration. In addition to virtual reality, augmented reality will also be introduced – the new iPhones have this technology. Ikea, for example, is working on an app that transposes furniture into images of real environments on your mobile phone.

A side effect that should not be underestimated related to this type of new shop concept is the required investments, but cost savings in the long run. As, instead of 400 square metres, 100 is enough for the haptic experience, the web takes care of the rest. The products do not have to be stored in an expensive warehouse in the city, but are delivered from the outskirts by courier. This considerably reduces the cost of rent, a big chunk of every retailer’s outgoings. And it draws new players to the inner cities – from the e-commerce giants to car dealerships, that introduce their models virtually, yet life-size and in 3D. Cities are becoming more colourful.

The future institute in Frankfurt, a think tank of various scientists, is going even further. The shop is becoming a place for open innovation. This means: Buyers and sellers become equal partners, not only in sales, but also in the manufacturing process, product range selection, product design and marketing. At Community Retail, customers help design the products. It’s worth it: In Japan, the retailer Muji investigated whether there are differences in the sales figures of furniture if they were designed by customers or if they came from their own design centre. Result: In the first year after the product launch, the sales revenue of the user-designed products was three times higher than that of the products from the design house. Over the years, this effect has increased.

This is all based on customer data – the more and the more exclusive, the better. This means that completely new business models can be created. The Otto group has launched a first approach in this direction with the About You portal. Based on all the data collected, a custom-made web shop is created for each individual customer. The vision for the future is to have orders already prepared before they even arrive.

The future of trade is dependent on technological understanding, but in particular on new ideas. Amazon has registered 1662 patents in the last year.

The time has come: for the first time, mobile (49.7 percent)  has globally overtaken desktop traffic (45.2 percent). (Mobile traffic mainly refers to smartphones, since the traffic with tablets is just 5 percent.) In Germany, the situation looks somewhat different: desktop traffic (62.8 percent) still dominates in use and mobile here is “only” at about 30 percent. Mobile is, however, also “mass market-ready”. Only the advertising expenses for the mobile sector with a sum of approx. 518 million euro for the year 2016 (source: Nielsen) did by far not reach it at all.

How can it be that the rapid growth in mobile usage figures is still not reflected in the investment, as the strengths of Mobile have long been known? No other medium is so close to the consumer as the mobile phone. This can be seen, for example, in the Google “Mobile Moments Study”, which states that 68 percent of the smartphone owners already use their smartphone 15 minutes after getting up. Push functionality allows the advertisers to actively contact the user, and couponing location information or opening times, for example, provide consumers directly with additional information. Just to mention a few of the advantages.

But what is important also in the mobile area, is a well-made creation adapted to the medium. According to an analysis by GfK , creation is the strongest factor in the success of a campaign. This is the only way to convey relevant messages to the consumer.

Mobile is more likely to do this with large formats and less with 6: 1 advertising. It requires meaningful pictures as well as texts, which have to be briefly and clearly formulated. Videos should work with and without sound and are designed for mobile devices so that their main message is communicated in the first three to five seconds.

Unfortunately, in the mobile area much too often the same errors are made as at the beginning of the desktop communication: what used to be the pop-up in the past, is today the overlay on the smartphone. But an overlay can also work when it is innovative and well-made – if it brings a playful added value in the form of “shaking”, “vibrating” or “wiping”. However, this requires an intelligent implementation by frequency capping. The best creation fades very quickly when the consumer has to click it away several times a day.

The most important rule in all lean forward channels is to not interrupt the users during their active use of their contents. New, usability-compliant formats that are high-performance alternatives to overlays make this possible. The so-called “parallax ads” slowly build up in the background with the scrolling process to an advertising integrated into the content. The user can thus interact with his content and connect it to the advertising medium.
And last but not least: mix it! No media genre unfolds its optimal effect when it stands alone. Only when built in a sensible media mix, each individual channel unfolds to its full extent.

My 5 main issues are therefore:

  • Relevance vs. Reactance: relevance in communication is good, avoidance of irrelevance is mandatory.
  • Mix it! – Combine mobile campaigns with other local media such as Digital Out-of-Home to extend further the local reach.
  • Think Big! – 6: 1 formats are not the future. Rather, the unique added value should be exploited and adapted to the device size.
  • Less is more! – Creative advertising media have had a positive impact on the mobile advertising experience. Messages on mobile devices have to be even more reduced and adapted especially to the size of the advertising media.
  • Don’t disturb! –The user’s behaviour should not be severely interrupted by the advertising. Advertising media should be preferably integrated in the content.

 

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More than 2,300 exhibitors from 208 countries and over 108,000 visitors (+7%); the organisers are very pleased with another record year. In brief, therefore, the outcome may be summed up as follows: No real surprises and as expected, the most important themes this year were artificial intelligence, combined with voice control services (‘Shy Tech’), Internet of things and ‘smart homes’ – whereby the boundaries are naturally very fluid. On the other hand, every possible virtual and mixed reality experience is pretty much par for the course at the exhibition. The strong presence of connected cars has been a surprise to me and robots made a discreet appearance. However, we will not be talking about any breakthroughs here for a long time yet. In this regard, some of us expected a bit more.

Cars are Increasingly Stealing the Show from Smartphones

The fact that the car is becoming more and more of a ‘mobile device’ was blatantly obvious at the Mobile World Congress (MWC) 2017. Therefore, it was interesting that all the exhibitors appeared to directly pin this theme, as well as their hopes, onto the new 5G network standard. In all the vehicle presentations, 5G was the most prominent topic and quite clearly what caught the eye of the public. However, although 5G had already been a massive theme at the exhibition the previous year, we must practice a little patience for a while longer, before we can perhaps whizz through mobile Internet in 2020 at tenfold LTE speed. The connected car shall then most certainly – just like other domains (e.g. mobile television) – receive a real boost once more. Many new services have indeed already been developed in this area so far; for example, the ‘in-car payment’ services emerging from the cooperation between Jaguar and Shell. Here, a payment system is directly installed in the car as an app. This really makes sense these days and does not require 5G for a satisfactory user experience.

A further challenge consists of ensuring a rapid network and first-rate services in both directions, meaning content and services being conveyed as seamlessly as possible throughout the user‘s journey. This is because all the new things on offer, whether connected cars, smart home uses or new app services, can only unleash their potential, if they are networked and configured with each other. Therefore, it is no wonder that the race to determine the key user ID began a long time ago. Along with the major tech companies, automobile manufacturers now also have their own ideas about this – e.g. the seat ID on starting up; or they will at least have already let the engines warm up. Time will tell whether this is enough for them to get one step ahead.

Connected Products everywhere

The various networked products on offer were exactly as expected. For example, a whole range was presented by Bosch – from ‘BML050’, a high-precision scanner for interactive laser projection, which can also be installed in toy figures; to the ‘Spin Master Zoomer Chimp’, a toy chimpanzee with lifelike actions. Finally, the smallest of the new technologies must certainly be introduced. Arguably the most important connection currently in the smart homes network is voice-activated access, ideally equipped with intelligent bot systems. It was clear here that Amazon Alexa and Google Home did not want to miss out on this on the market.  Correspondingly, it was possible to discover the first alternative systems at MWC: e.g. NUGU, SONY Agent, or Aristotle Hub by Mattel with Qualcomm-Power, for the networked children’s bedroom of the future. This abundance of new products will revive trade, which will ultimately benefit the user. Decisive for the success of individual devices, however, will mainly be the infrastructure they are networked with, which all the major players particularly avail themselves of: search engines, shopping portals, music libraries and smart home interfaces. Firstly, a voice-activated system can render these platforms powerful.

Virtual Reality: Increasingly Part of the Furniture

This year, VR- and AR headsets surely had one of the most stand-out profiles at the exhibition. In the VR domain, it was new accessories that were mainly presented: wireless systems or the VR glove for an even more immersive experience, like the HTC Vive Tracker, which we had already hotly anticipated. New VR installations on the Samsung stand also tempted visitors, although no longer in droves, as had been the case the previous year. Virtual reality has finally become a reality in 2017. There were no more big surprises.

On the other hand, it was interesting that many exhibitors, e.g. Intel, had integrated the Microsoft HoloLens into their presentation concept. This did not exactly take one’s breath away, but felt consistently appropriate and on point and most certainly gave a final touch to the product presentations.

And Phone Highlights?

Yes indeed, there were of course other hardware novelties too – this theme had indeed faded almost into the background for a few years at MWC and on this occasion again, there were practically no surprises, aside from the Nokia 3310. It was quite absurd, the amount of attention given to this. The retro-mobile phone is rather a peripheral issue. Perhaps, however, it is the fact that manufacturers, whether LG (G6), HUAWEI (P10/plus) or BlackBerry (KeyOne) all actually offer great big beautiful smartphones with more and more amazing cameras. In the end, they all look pretty much the same anyway; although brands seem to primarily lean towards Apple and Co in terms of design. Overall, the devices are of course higher performance: evolution rather than revolution is also the motto here.

Meaningful Evolution

Meanwhile, some journalists and commentators complained that no major innovations made an appearance this year. Yes, that is certainly true and it is of course great fun to report on trailblazing products. However, instead of calling for another new wave of technology, we should take time to assess the existing solutions and marketing possibilities for ourselves as users and if they suit us, to apply them for our own purposes with sense and understanding. As an example, take virtual reality: in the past year, marketable devices were launched for the first time. Users and brands alike very quickly started the ball rolling and each recognised great potential in it. As a result, VR systems are increasingly landing up on the wish lists of technophile customers and correspondingly, ranges are slowly growing. At the same time, many brands have transformed the momentum of the past year into concrete project development and work on the respective products, both in the B-to-B and B-to-C domains. VR projects are frequently cost-intensive and time-consuming. All parties involved are thus responsible for circumventing this by using the available resources.

Great, if the next big thing is not all the rage already.

As digital specialists we get to work in an exciting environment. New, technology-driven topics are part of everyday life for us. Trade fairs like CES, MWC etc. are a Mecca for innovation. For what’s important. For relentless progress. The most important event on the calendar for all mobile technology enthusiasts kicks off once more today with the Mobile World Congress (MWC). Just like last year I will rush through the halls – searching for new ideas, the most exotic, exciting gadgets, system solutions and digital products as well as, of course, interesting discussions. Face-to-face and fully analogue.

I am expecting that the MWC will focus on the following five trends:

  • Chatbots and Artificial Intelligence
  • Virtual, Augmented and Mixed Reality
  • Internet of Things and Smart Homes
  • Shy Techs
  • Robots

Many of these topics featured prominently at the trade fair last year too. What will be exciting is to see where the technologies are heading in the future – and when they will become commonplace in our everyday lives.

1) Chatbots and Artificial Intelligence

Chatbots are an exciting example of how a rather minor trend topic – since such a simple bot is ultimately constructed relatively quickly – develops into something of much greater relevance. Chatbots fulfil the wishes of consumers to quickly and easily access information that is tailored precisely to their personal needs and is available whenever and wherever. However, the simple interface alone will by no means be enough. The systems only become powerful when the accuracy of the responses is optimised by CRM, product and other database connections. A chatbot has to be able to address communication histories with the customer and learn constantly. It will be exciting to see which system solutions will be offered at MWC and which environments will be used to demonstrate chatbots. A social media messenger is ultimately just one of many possible applications.

2) Virtual, Augmented and Mixed Reality

It is really overwhelming to see the hardware that has been launched on the market in this field over the past year. Virtual reality became reality in 2016. New gadgets have spurred our imagination and given us a foretaste of the future. No question. These exciting times are set to continue with providers like Samsung having already announced many new developments that are to be presented at MWC. Sensational opportunities are waiting to be discovered in selected areas. But even if companies like Oculus, HTC etc. are recording increased sales in the area of True, that is to say fully immersive, VR, really wide-scale availability is not yet achievable. It is the brand stagings at the POS or at trade fairs that are the most exciting at present from a marketing perspective. In terms of certain aspects anyhow.
Augmented reality has also not made the major breakthrough as yet. Even if this was promised by so many owing to a short-lived but fierce battle with Pokémon Go. Most players had probably not activated the camera anyway when playing. And HoloLens also is primarily a great problem solver for a couple of individual application scenarios – for example in the framework of training measures. The focus at the moment though is still on “one-offs”.
However, I am really excited to see whether a real augmented reality breakthrough can be achieved here at MWC (or at an upcoming Apple Keynote?). The usability of these functions from a system perspective can all of a sudden provide the breakthrough in terms of real availability and exciting services. In a time when basically all information is already provided with a spatial coordinate, this information can also be linked with the camera function. Additional information on locations, on a person you are talking to or individual products as basic features – now that would be something!

3) Internet of Things & Smart Homes

No question. Anything that can be wired will be wired. CES and MWC will also compete in this sense for the most amazing products. But what else is left other than to wire hairbrushes? All will be revealed… With all of this absurdity, however, we should not forget that there are definitely exciting applications in the area of home automation. There’s no going back once the wireless speakers are established in your living room. And if you’re not sure if you switched off the lights, the oven or the hob, a quick look at the smart home app will ease your mind. Whether or not you are already signed up for all of this: just say you notice that toilet paper stocks are running low and can order supplies on the spot, then the entire household will benefit. These functions and others will increasingly – and, quite understandably – find their way into our homes.

4) Shy Techs

At the end of the day, most people simply want an easier working environment and a seamless living environment. This is the case even if they are not technology nerds. The term Shy Tech seems to aptly describe such people. No keyboards, not even monitors are absolutely necessary to control functions or retrieve information. Amazon has taken an initial giant step in this direction with “Echo”. Google Home is set to follow and Apple is planning to continue developing Siri, probably more likely with the iPhone as hardware than with its own loudspeaker. Great, if everything works smoothly. An army of clever bots will support us comprehensively.
At this point at the latest, a little reflection is always needed: where will the data actually be stored, where can I find information about this? Can the practice of law really keep up if product development is entering new grey areas or completely uncharted waters every day? Developing ideas and content for these systems is certainly the right thing to do. But maybe we should start off with cookery recipes and not immediately have medical records read aloud to us by these voice control systems. In any case, I am expecting to see every conceivable application at MWC. It will be interesting!

5) Robots

If Alexa and Siri learn to walk in the course of the digital evolution then robots will probably be the final outcome. Already last year you could use a smartphone to roll small robotic balls through an empty apartment and use integrated cameras to keep an eye on the apartment even from the café or play with the cat. Smartphone-based control is likely to stay, but the robots inside the rolling balls will probably unveil themselves as fully-fledged robots for use in the home. I am very excited to see what innovations will emerge in this area. Maybe I’ll meet “Kuri”, the small Bosch robot, or one of its fellow species. Apart from the quite legitimate question that Bill Gates recently asked as to whether taxes would not have to be levied on commercially used robots in the future to compensate for any impending decline in revenues from income tax, robots will probably become established somewhat slowly in our private everyday lives.
After all, I still prefer it when I can ask a human for directions in the shopping centre as opposed to a robot. And I am not alone in this. That’s why we have to take a step back from all of the euphoria that surrounds trade fairs like MWC. Our goal is to support our customers optimally in ensuring they are successful and equipped for the future. We keep an eye on all trends, analyse, make recommendations and advise. It’s not about being the fastest at implementing new technologies, rather finding the best and most suitable solution for the customer. Even if this sometimes means initially forsaking the latest hype.

More information and pictures from the Mobile World Congress can be found on Tumblr: sp-url.com/correspondent

The mobile Internet booms in Germany, both in terms of users and traffic. Even shopping on a smart phone is becoming more popular. At the same time, programmatic advertising has established itself as a fixed value, at least in online media business. As a consequence of both developments, mobile programmatic would therefore have to be a big hit. But the advertising volumes in this segment – beyond the silos of Facebook and Google – do not grow to the extent which one would expect. Why is it that mobile programmatic advertising does not yet use its full potential in Germany?

When we talk about mobile advertising today, we mean primarily in-app advertising with formats such as banners and video ads, all the way to full-screen interstitials. Three out of four advertising dollars are presently spent with apps. Apart from the fact that there are significantly different and fewer web formats in apps than on the desktop and the use of data on Apple devices is made difficult by the lack of cookie acceptance, in terms of programmatic possibilities, the mobile web works in a very similar wayto the web that we access on the desktop computer.

German marketers have overslept the topic

And indeed, mobile apps have already experienced a boost through programmatic advertising: before the era of DSP and SSP, coverage could only be booked via aggregators. A third-party control via the agency’s or client’s ad server was not possible. Due to the advertising ID from apps today, a very stable identifier is available which permits a longer-lasting profiling than a browser cookie. Via programmatic advertising, an advertising client can control his campaign, targeting these profiles for the first time in an app-encompassing way.

And there is another important advantage: data providers make data available that permit new and effective campaign approaches, especially in the area of hyper-local targeting – to address potential customers in close proximity, directly and accurately.

So why the hesitation? German marketers of quality apps have slept through the topic of programmatic advertising. They are only slowly making their coverages for in-app advertising reasonably programmatically usable – because this includes more than simply adjusting the app to the supply-side platform. This carelessness means that large parts of the programmatically available offer of mobile advertising in Germany still consists of opaque ranges of international marketplaces.

Not the technology, but the advertising formats are the obstacle

And in the “Global Exchanges” there are considerable deficits concerning transparency and technical control. The consequence: AdFraud – traffic which is generated, not by human users, but by so-called bots – is a significant problem for mobile in-app advertising, both in terms of reach and data, and thus represents an obstacle to growth for the industry as a whole.

With the extensive possibilities of programmatic advertising, mobile advertising also becomes easier to book and to control in a targeted fashion. But programmatic, too, cannot solve a central problem which advertising on smart phones generally still has: there is still the lack of large-scale, attractive advertising formats which are indeed eye-catching, but still do not annoy the users. If we can cope better with this challenge, the boom will be yet to come for mobile advertising.

For six months, chatbots have existed in Facebook Messenger and there are now more than 30,000 available for users. The initial hype has calmed down and now companies are wondering if bots actually have the potential to become relevant communication and distribution channels for their content.

All chatbots essentially work in the same way. Users ask the bot a question and the bot searches through its stored database in accordance with certain rules, in order to respond with a suitable answer. The greater the database, the greater the knowledge which the chatbot can revert back to.

Mobile driven user behaviour and technical developments smooth the way

The requirements needed for the success of chatbots certainly exist: On one hand, internet usage is extending increasingly to mobile devices and here communication occurs primarily through instant messengers. The approach to text messaging has finally become seen as an everyday matter and the users have got accustomed to this reduced communication form.

On the other hand, all major tech companies are investing massively in the development of artificial intelligence, machine learning and in the understanding and processing of natural language through algorithms. Bot providers can relatively easily incorporate offers and services of interested companies into chatbots via standardised interfaces.

Unpredictable human communication

It will remain some time before a conversation with a chatbot is indistinguishable from a talk with a real person, as many chatbots currently reach the limits of their communication rather quickly. Either they fail in the correct processing of human communication, including all unpredictable factors such as slang, dialect or typos, or their repertoire of responses is rapidly used up. Initial reactions of early adopters were sobering. Among other factors, this was due to the fact that Facebook opened the chatbot platform for developers only a few weeks before the official launch.

Facebooks vice president of messaging products, Davis Marcus, admitted that this time frame was possibly too short to develop a good chatbot. Since the launch, Facebook has made many APIs and much guidance available to developers. We can therefore look forward to seeing how the second generation of bots will turn out.

For long term success, however, two central requirements must be fulfilled, above all:

Discovery: There is currently no easy way to find chatbots for Facebook Messenger, as we are still waiting for the launch of the announced bot store. The user must therefore know the name of the bot and integrate it via the search function of Messenger. Other messengers like Kik, Telegram or Skype already offer overview catalogues.

Added value: So that users don’t delete a chatbot after trying it out just once, from the first use on, the bot must offer real added value. This can include various aspects:

  • Reducing complexity and information: shopping bots, such as Tommy Hilfiger’s chatbot, help users when looking for suitable products, by giving them a pre-selection of products through targeted questions. The added value of news bots like the one of CNN also depends upon a reduction in information. Users indicate which content they are interested in and then receive suitable contributions in return through push messages.
  • Time efficiency and problem solving: The airline KLM emphasises special service for their customers: if you want to change your seating place, for example, you don’t need to open the app. You can simply send a quick message to the KLM bot.
  • Additional offers: In several US cities, through the Absolut Vodka chatbot, users can find bars in which the product is available. The added value here is that the user receives a voucher for a free drink as well.

If these points are further optimised in the new generation of chatbots and the problem of discovering bots is resolved, there is much to suggest that these services will establish themselves as communication channels for brands. With a sufficient amount of offers, in Europe and in North America Facebook Messeger could become a mobile central service point for users, just as weChat, LINE and Kik have done in many Asian markets.

Following an afternoon full of presentations and panels concerning the Bluetooth Low Energy technology at the 3rd Beacon Summit at our head offices in Munich, I got into a discussion with two other attendees. It was clear that all of us understood how this technology works: A small sender (Beacon) sends out a signal that almost any mobile device can read/detect. If your mobile device has Bluetooth activated and is within about 30 meters of the sender, it can read/detect the signal. If you have the right app, the signal can be interpreted and used to identify where you are and send you messages.

It is a very simple and fairly robust technology that anyone can use. Many companies have already stepped into the Beacon market and even Apple, Facebook and Google are investing heavily. A lot of people are investing a lot of money, a lot of time and waging their businesses and quality of life on this technology.

So what can you do with it? Well, there are a couple of standard showcase ideas. Indoor Navigation and Retail Push are the most common scenarios. Say you arrive at the airport and need to go to gate G49. You have no idea where that is, but by using Beacons, your location and the location of the gate are known and our app can easily get you from where you are to where you want to go. The same basic idea with a twist accounts for the other scenario: You enter a retail store and instantly get a notification on your mobile device telling you that the blue jeans are on offer. The jeans are located right next to you, on your right. – And here’s a 5€ coupon to sweeten the deal.

After two minutes of polite small talk, my fellow attendees and I got into an interesting discussion: Are indoor navigation and retail coupons that interesting? And if it works that well, why isn’t it already everywhere?

Sometimes we tend to geek out about the possibilities and forget the actual use case. We wait for a technology to solve our problems, missing the fact that our problems might actually just be the symptoms of a larger one.

Say you are a retailer. You sell jeans. You want people to buy more jeans. If your solution is to point your customers to the exact jeans you want to sell, give them a 5€ discount, lean back and wait to see your sales numbers soar, you have a bigger problem.

Why we buy stuff is simple: Maslow’s hierarchy tells us we have needs concerning physiology, safety, love/belonging, esteem and self-actualization in that order.

How we choose what to buy falls in those just-to-the-right-of–the-middle categories. We buy stuff to find and signalize belonging and to gain esteem from our peers and ourselves. So we don’t (just) buy jeans because we wouldn’t survive the winter without them, but also because we would become outcasts and lose our self-respect if we went to work without them.

What exact kind of jeans we choose doesn’t really matter on the account of needs. Of course if you produce jeans and want to increase your sales, it matters to you. But not to me. I just want to show up at work wearing jeans.

However, telling a great story will help move my opinion from one product to another. And that will change my attitude. People stand in line for days to get the latest iPhone but complain if there’s more than five people in front of them at the supermarket. Why? Because the story of the iPhone is better than that of Broccoli*.

So instead of just offering me a 5€ discount, tell me the story of your product. Let me know where I fit into that story and what my role is. Engage with me on an emotional level. And before you go buying Beacons because it’s the Next Big Thing, take a step back and answer these questions first: What kind of story do we want to tell, and what technology might help us tell it in a way that is relevant for the end customer? How do we engage with our customers, take them by their hand and start telling a story together?

Beacons might be a vital part of the solution, but don’t expect the technology to deliver the sales by itself. The story is more important than a technological framework. And if you need help with figuring out exactly what the story should be, how to tell it or what technology fits in where, I know a great agency for that!

*Actually, the man-made(!) vegetable Broccoli has an extremely interesting history. So maybe Broccoli has to have a talk with it’s advertising agency about telling the story in a better way?