KaKao

Plus Friends, the matrix of Kakao advertising business

 

In May 2011, there was not much in the way of a 'mobile business model.' Creating a banner unit in the service was almost the only way to generate ad profits, except for games or paid apps. Some experts even painted a grim picture of the sustainability of the mobile messenger.

 

People started to turn their fraught gazes on Kakao, which opened up new vistas with more than 10 million active users.

 

"Can we cope with server expenses?"

"I'm wondering if we could keep operating the business without mega-round fundings."

"Can we create a meaningful business model both for users and clients, on the small smartphone screen?"

 

And then, Kakao regularized round-table meetings to explore new business pipelines. On May 6, a meeting was held to discuss how to expand the phone number-based acquaintance communication into a non-acquaintance or brand communication. On that day, JB, then CEO, left a message on Agit (i.e., Kakao's work platform).

 

"We created the 'Virtual Friends' TF in the Strategic Planning Department. Its major role is to determine the concept and mock-up of Virtual Friends. After the mock-up is all set, we will discuss the future direction again."

 

# Connecting to favorite brands

The TF members braced themselves up to create user values as never before: making friends with one's favorite brands or celebrities or receiving valuable information from them right in a chatroom. It was a new experiment that a company like Kakao attempted to connect everything and communicate with everyone in real-time. Those like-minded Internet professionals empathizing with its vision gathered to join the Company.

 

Indeed, there were some oppositions against the project within the camp. 'Who would ever add a brand on the Friends list? Generally, people tend to feel repulsion against ads. Shouldn't we consider whether they feel offended upon the receipt of ad messages?'

 

Baron, then project manager of Kakao Advertising Business Team, established the guidelines to dispel unfavorable opinions among potential clients and Krews.

 

(1) Users should add friends willingly.  (2) The service should start with power brands (or household names). (3) Messages should contain benefits. (4) We must beat resistance by elaborately designing how and what content a message delivers and what time and how many times we send messages. (5) We must shut up the project if we fail to make a good result from the three-month co-testing with ten power brands.

 

Users tended to proactively interact with a brand friend that they could share an affinity with, which sparked an idea that any such advertisement harnessing brand affinity could be received as more of 'content,' thus 'emotional,' compared to other existing online advertisements. The only concern was how to embody this idea in a feasible way with qualified partners.

 

The first business plan came out less than two weeks after the task force team was formed. We had to find the right partners among national food and beverage franchises that could provide substantial benefits to users and ally with cosmetic brands preferred by target female customers aged between the 20s and 30s. Also, we had to sort out various requests from partners while deciding how to invite friends and execute promotional events.

 

#Confidence and Pride: going from one extreme to another

The fourth week from the TF commencement. Krews had a meeting with marketing representatives of a casual dining restaurant to discuss business proposals. They tossed around ideas such as offering exclusive coupons for Virtual Friends, premium membership for loyal users, and the like. High expectations were formed that KakaoTalk would help recruit a similar number of new online subscribers as 3.5 million, the result of their strenuous efforts for the decade, within a very short time.

 

However, the responses were not all enthusiastic. In a meeting with some coffee franchises following the casual dining restaurant, Krews received feedback, "Customer experiences at offline stores are so important that we don't see any necessity to engage with customer activity in partnership with a mobile business operator."

 

Krews left cheering comments on the report they posted on Agit after the meeting. "Later, they will hold out their hands before we do." "The world is still wide, and there are many customers yearning for our move. Just go for it!" All were of confidence and pride.

 

The bond of sympathy was formed, and preparation work picked up momentum thanks to supports from Krews. Baron continued meetings with potential clients and shared inbound feedbacks. Not to speak of Ted, planners, developers, and designers ceaselessly updated and simulated the operating environments that clients and users would experience. 

 

# Finally got a name tag of 'Plus Friend’

During that time, the project title changed from 'Virtual Friends' to 'Brand Friends' through meetings. However, that title was soon criticized as being too particular to encompass celebrities, local merchants, content providers, NGOs, and the like. 'Business Friends,' 'Augmented Friends,' 'Push Friends' and many other names were suggested as a candidate. The entire Krews went to the polls to decide a title since the project was Kakao's first advertising business model.

 

In July 2011, Plus Friends, bashfully suggested by Myu, received the most votes to be chosen as the title. 'Plus' means that users can enjoy a variety of information, benefits, and contents as an incentive through the service. And its catchphrase was "Meet your another friend, Plus Friends."

 

Just three months after the project commencement, the team got to secure ten new partners. Prominent brands from the distribution, food service, resort service, social commerce, and the like decided to enter the Plus Friends platform and provide more abundant benefits than they had done to any other media.

 

#Does it work for all?

Krews were preparing for the launch of Plus Friends at a rapid pace when an unexpected question popped up,  "Does this model work for long-tail clients?" (*Note: A long-tail client means a small scale advertising client including self-owned business, not large enterprise.)  They noticed KakaoTalk users spontaneously perform personal marketing activities using their personal KakaoTalk accounts. As is known to all, Plus Friends had a very simple marketing structure offering discounts or coupons for 'Add as Friends.' Personal marketing activities caused Krews much concern since they planned to expand the service to encompass long-tail clients afterward.

Some even pointed out, "Who is willing to be our partner and pay for the Plus Friends advertising service if anyone can harness his/her personal KakaoTalk account for marketing activities?"

 

In the meantime occurred the very opposite case: an entry request from a plastic surgery clinic in Gangnam. They asked us to provide a "packaged service containing APIs and Admin tools so that users could just click a button to complete the verification process and to 'Add as Friends' directly on the clinic website." This case gave us a hint that an "exclusive advertising package for hospitals could make us earn a huge revenue."  

 

Krews drew a conclusion from a long discussion that "Plus Friends should be a "business model with a clear purpose." 'If it allows personal KakaoTalk accounts to communicate for their own businesses, it will soon reach the breaking point by the time the number of friends exceeds 100,' which was supported by all Krews. Therefore, Plus Friends started to equip itself with novel features that no mobile platform had ever showcased before, such as one to many messaging, various message templates, video/audio file-sending, analytics for AD performance measurement, targeting tools, and the like.

 

#Kakao Partner Business Group made from Plus Friends.

Plus Friends came into the world five months after the TF embarked. During that period, the number of KakaoTalk users approached 30 million, well over 20 million.

 

With a hamburger franchise partner, Ted made a visit to one of its Yeoksam-dong stores. Barely a day went past the launch of Plus Friends, but they had been already informed that the number of subscribers via Plus Friends was much more than that of the brand's Twitter followers. Indeed, there was a long queue to use Plus Friends coupons at the store. It was such a moment that Kakao realized how explosive this new-born service could be.

 

Recruiting 1 million subscribers per brand, Kakao's then KPI, was soon achieved in the first five days after the service started. A magazine partner tapping into the possibilities for content subscription and a game publisher promoting its new games were all marveled at such a phenomenal success.

 

In fact, Kakao had to request arrangements to introduce its advertising business model to potential clients because it was a completely new species. However, things turned around in a flash. Clients lined up for themselves to enter the Plus Friends platform. Literally, the service received the industry's enthusiastic response despite three short months of beta testing.

 

Plus Friends seemed to establish itself as a rock-solid model but was soon tied up in knots due to the lack of workforce instantly responding to various demands from corporate partners. Moreover, some of the Krews who had steered the project moved to Kakao Games and other platform teams, even though Plus Friends was not ripe enough. The service launch was so perfect in itself; however, mixed opinions inside the Company eventually resulted in repeated conflicts and sluggish growth.

 

As time went by, those unfulfilled needs and unrealized solutions finally got to take various shapes.

 

Plus Friends was upgraded to Talk Channel while messaging solutions evolved into Info Talk and Smart Message. The chat consulting solution had its final appearance as Chat Bot, and a one-stop subscription with KakaoTalk prompted the inception of KakaoSync. Kakao's integrated marketing tool KakaoMoment (page hyperlink) and Partner Business Group, home to hundreds of corporate members, are all derived from Plus Friends.

 

"It was a time when people typed in keywords and looked for relevant sites to learn information. Then, we introduced a subscription-based communication model to the market. Neither Kakao nor its clients were familiar with such a model because it was a whole new kind to all of us. However, Krews constantly co-ruminated on what users deserved, and that, I believe, was why Kakao could eventually come up with diverse marketing solutions harnessing KakaoTalk."_By Ted

 

"Plus Friends, the world's first business model pursued by a mobile messenger, is perfectly in line with the Kakao spirit, Be brave enough to travel the unknown path."_By Baron