Instant messaging is replacing SMS text messaging, owing to the demand for more expressive, interactive content and the popularity of more powerful feature-rich smartphones. WhatsApp and LINE, two dominant instant messaging platforms have over 1 billion users and growing.
The number of instant messages and SMS being sent is increasing from an estimated 18 trillion in 2014 to 33 trillion in 2016.One challenge that remains is how to monetise this fast-growing messaging traffic.
Visixtwo witnessed in Asia the huge popularity of Digital Stickers, the ‘next-generation’ of emoticons, and believes this trend will soon arrive in the West. We have designed, are continuing to design and plan to launch a series of character-based, multi-media content.
Initially sold to end-users as paid-for downloads, we intend to build our brand and reputation and then move to providing branded and sponsored content to businesses to allow them to market themselves to end users via chat, in an unobtrusive but fun way.
Through the regular release of expressive and immersive character-based digital stickers, we intend to build a strong brand presence and become the market leader throughout the EMEA region for the design of fun messaging content and become the ‘go-to’ experts in messaging marketing opportunities.
We want to research and develop the next generation of increasingly interactive digital stickers to seamlessly and discreetly provide access to, for example, movie trailers or branded products to create further monetisation potential. We intend to be at the forefront of developments in this new and innovative form of marketing.
Our focus on character-based content and humour is anticipated to appeal to our target audience and allow businesses to connect with users to cross-sell their products and services subtly. Recent research by Nielsen found that on average 44% of users “were OK with advertising if it means that I can access content for free” and 37% “more likely to click on an ad that does not take me outside of the application to another website Our products will be designed to minimise the intrusion experienced by the end-user and yet still allow valuable marketing messages to be delivered.
We believe that with repetition, comes recognition. With recognition, comes revenue. With up to 1.8bn digital stickers sent and received every day, we see 1.8bn opportunities to promote products or brands. We think this market has huge growth potential. We are designing and developing engaging and innovative products that are entertaining and that the end-user would actively choose to use in their online conversations. We believe that the natural spread of our products through increasing volumes of chat traffic between friends will become self-promoting and be considerably appealing to companies and brands seeking to quickly access a sizeable and lucrative audience.
Substantial accomplishments to date
We have formed our key team.
Nathan Barker (CEO) is a technology entrepreneur who founded, built and sold an online marketing agency. He is advised by Robin Fielding, a chartered accountant with many years of corporate finance and advisory experience.
Jan Gimeno heads our creative team. He has illustrated two published books and has many years’ experience in the creation of characters and mascots. Xavier Nereu is an experienced illustrator and character designer. He produced promotional digital stickers for the Spanish film “Ocho apellidos vascos” which were available through the LINE messaging platform.
We have created 5 sets of digital stickers based on characters developed in-house, designed to appeal to the 13-25 year age range. We currently have 5 sets submitted to LINE for review and we expect to launch at least one set on the platform in December 2014.
We have filed 8 copyright and two TM applications for our proprietary characters to protect our IP and brand.
Initially focusing on the B2C market and selling to end-users, we plan to regularly publish new sets of digital stickers to gain market traction and build our brand. We then intend to focus on the B2B market by working with companies and brands looking to exploit the significant marketing potential of instant messaging.
We see four key revenue streams:
The instant messaging applications, as well as other services which provide messaging such as dating and social networking sites, form the distribution channels. Their users will purchase sets of digital stickers featuring characters that we design, and we would receive a share of the download revenue. The typical retail price per download is anticipated to be US$1, rising to US$2 for established products.
We will use funds from the raise to design interactive sticker products that will generate a fee per click / action. Revenue would be generated on a commission / affiliate basis or as a fixed cost per action and will be shared with the messaging platform.
To promote brands using sponsored stickers that are free to the consumer, Visixtwo would be retained to produce the creative content with our in-house team, connect brands with the best platform and negotiate terms of the sponsorship. This would generate a one off fee for design and a % of the value of the campaign as an agency / account management fee.
Having a popular and successful character-based set of stickers allows for licensing and partnership opportunities by leveraging the recognition of the character. Visixtwo intends to form partnerships with brands, white-labelled games and applications, charging a licence fee for each use of our characters.
Use of proceeds
The purpose of this round of fundraising is to raise our profile within key strategic instant messaging platforms to increase the number of potential customers we can reach.
We also intend to develop a new interactive product that would bring a competitive advantage in the form of advertising and promotion.
This raise is planned to fund:
Business Development Manager who will identify, form and develop relationships with platforms that carry large volumes of chat to increase the reach of the business
HTML 5 development costs to build an interactive sticker that can be used for advertising and promotion
Execution of the marketing plan to build brand awareness and launch our character-based stickers on several messaging platforms
The end-user and potential audience for our paid digital stickers is a typical messaging app and smartphone user. They are under 44 years of age, with the majority being 16-35. While the purchases of smartphones are marginally biased towards men, we expect the volume of communication to be higher amongst female users and therefore we bias the visual design of products.
From figures published by LINE, we have established that their 2013 paid digital sticker sales were US$120m annually. Of a total user base of 200m during that time period, this equates to a potential US$0.60 per user in digital sticker revenue. Forbes has estimated that there are c2.5bn global messaging app users in 2014, excluding dating or social discovery applications. If the LINE revenues per user figures are extrapolated across the entire user base, this equates to potential annual sticker download revenues of c.US$1.5bn. Visixtwo intends to be at the forefront of providing products that capture a share of this growing market.
After an initial period of developing our product offering and brand, we intend to focus on taking our product to businesses. Our target market will be those companies seeking to connect with their customer base through innovative, yet discreet, online advertising.
Characteristics of target market
Use of SMS has been decreasing steadily for some time, with demand for instant messaging increasing year on year. Deloitte estimate that the total SMS messages sent in the UK in 2013 was 145bn, down 5% from 152bn in 2012 and a further 3% drop predicted in 2014. It is forecast by Analysys Mason that in 2015 27.5 trillion instant messages will be sent, growing by 20% to approximately 33 trillion in 2016.
While the most known messaging application is Whatsapp, the reality is that age and geographical location will determine the choices of platforms. A US teenager for example is mostly likely to use KiK the teen-centred community in addition to perhaps Facebook messenger. A South East Asian user is most likely to use LINE, WeChat or KakaoTalk. Indian users are more likely to gravitate to Nimbuzz.
As each platform becomes aggressive in their expansion these assumptions change. For example LINE has 18 million users in Spain and is extending its EU reach with German and Portuguese language support.
We believe the key to reaching the B2C market, and to creating a successful sticker product, is to produce something a user likes to use and feels is expressive – perhaps linked to their personality. The visual design needs to appeal to a group of users, as it is a form of identity much like a fashion brand. To ensure we have a successful visual identity, we will test designs using surveys and social media. Survey results would be combined with “likes” and compared to views to gauge success of each production. From these results we could target the age, sex and location of the potential customer of each product.
Visixtwo’s initial focus will be on increasing the number of end users of our products through marketing and the design of strong content. Once we have achieved a critical mass, the level of active marketing can decline as our products become self-promoting through the two-way and viral effect of online distribution (chat) between friends.
When selling our products and services via B2B, we believe that education is the most valuable tool we have. As the concept of using digital stickers for promotion of brands is new, particularly outside Asia, we see an opportunity to inform the market and become a commentator and specialist, benefiting from first-mover advantage. We intend to become involved in the following:
· Industry analysis/ media commentary on industry announcements
· Content marketing and guides
· Publishing campaign data and statistics (anonymized)
· Trade Press
We plan to design our characters in-house and retain the rights. This means that unlike the licensing of existing characters, we would have the ability to extend the character “brand” and to offer other online and offline products for which we would not pay a royalty. We believe our B2B customers will value this flexibility as it could become an integral part of their own online and offline marketing campaigns.
Designing expression-based art is a niche and from our own development and experience we know that many artists simply cannot adapt to what is effectively a postage stamp-sized canvas. We have established a team that is experienced in this speciality and that has previously created content to promote both characters and products. We have also created a “bank” of several character-based sticker sets to date which will allow us to hit the ground running as soon as we commence product release on the messaging platforms.
We intend to approach product release with a similar business approach to the record industry, with a marketing plan which executes leading up to a release date and stagger the global release with localised and translated content.
Competitors who are established in combining brands and digital stickers for marketing are currently all based in Asia. VisixTwo can bring knowledge and skills of the European market to become a specialist in this region.