KEY POINTS

  • Advancements in AI, coupled with the ever-growing popularity of messaging apps, are fueling the development of chatbots. These software programs, which use messaging as the interface to carry out various tasks for users, are generally integrated into messaging apps to capitalize on these apps' vast reach and the conversational interaction they promote. 
  • Chatbots are particularly well suited for mobile — perhaps more so than apps. Messaging is at the heart of the mobile experience, as the rapid adoption of chat apps demonstrates. Plus, accessing transactions and services via messaging is faster and easier than installing, opening up, and navigating through a brand's app. Chatbots are also cheaper to build and maintain than apps.
  • Businesses, seeing the potential, are beginning to experiment with the technology. A number of brands and publishers have already deployed bots on messaging and collaboration channels, including HP, 1-800-Flowers, and CNN. The top chatbot use cases are e-commerce, customer service, and content delivery. Chatbots could significantly cut customer service and sales costs.
  • The chatbot ecosystem is already robust, encompassing many different third-party chat bots, native bots, distribution channels, and enabling technology companies. As more businesses join the ecosystem, the experience will only improve for consumers, leading to greater adoption and, thus, better outcomes for businesses. Push, pull, and multimedia engagement are the most common bot interactions.
  • Chatbots could be lucrative for messaging apps and the developers who build bots for these platforms, similar to how app stores have developed into money-making ecosystems. If Facebook Messenger, for example, can monetize its Messenger platform in the same way that Apple has monetized its App Store, Facebook could generate annual revenue up to about $32 billion from chatbots, split between Facebook and developers. 
  • Barriers to chatbots taking off include discoverability issues and potential usage headaches. Consumers may get frustrated if it's not clear how to use the bots and if the text-based interface isn't well executed. As with most new technologies, privacy and security issues will also be important to address. 

Introduction

Advancements in artificial intelligence, coupled with the proliferation of messaging apps, are fueling the development of chatbots — software programs that use messaging as the interface through which to carry out any number of tasks, from scheduling a meeting, to reporting weather, to helping users buy a pair of shoes. Foreseeing [...]