Everything marketers need to know about chat app Line as it forges a path west after IPO

Line app

Line has its eyes set on the west, the world’s seventh largest chat app behind WhatsApp, FB Messenger, QQ Mobile, WeChat, Skype and Viber, with many of its 218m monthly active users (MAU) concentrated across Japan and the Philppines.

The app, created in 2011 as an alternative communication service for use during natural disasters such as earthquakes and tsunamis, has greatly evolved to become an app ecosystem that raises most of its revenue through the sale of virtual stickers, emoji and other in-app purchases, as well as ads to a lesser extent.

Owned by South Korea's Naver Corporation, Line is big in Asia but is restricted in China where WeChat rules supreme. However, it held a dual IPO on Thursday (14 July) in New York and then Tokyo, rallying investors with shares up 26 per cent at $41.58 – this attracted a valuation of $8.6bn making it the biggest tech IPO of the year.

By setting its sights on the NYSE, the app looks to break beyond its borders as growth stagnates annually after a major boom in 2013. Now the company has to tackle the social media elephant in the room, Facebook, which has a gargantuan share of the global comms market boasting 1bn MAU on WhatsApp and an additional 900m on Messenger (as of April 2016).

In 2015, the company reported a total revenue of $1.1bn with more than a quarter of that coming merely from the sale of stickers, boasting more than quarter of a million sets for users to explore. It's worth noting that the company claims that only four per cent of users in March 2016 spent money in the app, cementing the importance of brand partnerships to the company - especially those in markets untapped by Line.

Daniel Price, head of social operations at Lost Boys, said that few western brands have been involved with Line, he referenced Sir Paul McCartney and Raphael Nadal as two who managed to tap into Asia with promotional sticker packs that appeased their respective fanbases in the region. He added however “we haven’t see any brands that don’t already have a following there using the platform”.

He continued: “Traditionally, using stickers has been the main way to create content for Line and these are extremely popular in the eastern markets.”

Line acknowledges demand for the stickers could disappear and the revenue from this source could dry up. It's now focused on being more than just a chat app, having driven innovation in the ways in which brands and publishers can deliver content via personalised Gifs - or through bots - which he says is currently superior to the integration offered by Facebook Messenger.

“Following innovations that we have seen in WeChat, messaging apps are much more about providing an ecosystem for brands to interact in rather than just messaging apps, and Line has made great strides in this regard with Line Music and Line TV, where people can make in-app purchases for content.”

The IPO comes during a period of rapid expansion for Line but it has a huge challenge on its hands as far as gaining traction in the western market goes, as we already have several extremely large players asserting dominance: Facebook, WhatsApp and Snapchat.

Price concluded: "If Line can tailor its product to local audiences and gain traction, brands will begin to take notice."

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