Messaging Apps are getting innovative with the features in the apps that engage audiences by introducing animated Gifs, Stickered messages and peer to peer payments to keep the audiences engaged.

The messaging startup, KIK, which raised USD 38.3 million, in November 2014 has purchased Relay, a GIF-based messaging app that fits into its advertising plans. Kik is ideally suited for targeting younger age groups and has 185 million registered users, a base that includes 40 percent of U.S. youth between the ages of 13 and 24.

In a similar effort to bolster Engagement During Holiday season, Facebook rolled out several innovative features:

A festive frame for your New Year’s Eve selfies
Snow globe chat heads
Holiday inspired sticker packs
A lightweight new Creative Labs app by the Messenger team called Stickered for Messenger that enables you to add stickers to a photo and send them to friends on Messenger

 

Kik has earlier launched a Promoted Chats Product bringing in advertising revenue. Kik has earlier received a response rate of ten percent click rate for video for the digital comedy crew Funny or Die, video promotion.

It is among a handful of brands testing Kik Messenger’s ad product, which lets marketers promote their accounts, accumulate contacts and connect with them.

Among the other messaging apps that are earning revenue Line has generated revenue of more than   USD 400 Million in 2014 (figure approximated from USD 385 Million Revenue of 2013). WhatsApp has hit a 600 M Monthly Active Users and According to Forrester Research report and a report by AdWeek in 2014, is largely relying on subscription revenue.

Despite the opportunities for monetization, only a few messaging apps have quantified revenue models.

Here are seven ways to Monetize Messaging Apps as shared by GFK:

Subscription

This is the obvious choice to generate revenue however, WhatsApp was the first mover in this market and charges USD 0.99 for users to subscribe following a year or more of free trial. WhatsApp, being first mover, was able to set market expectations with its subscription price so it will be very difficult for a competitor to charge users for a less well-known product. Interestingly there will always be a small loyal proportion of a user base that is willing to pay for services if they value it highly enough.

Personalization

Stickers, premium stickers, sponsored stickers, branded/official accounts and personalized ID’s are current methods employed by IM apps that successfully generate revenue. This is the most ubiquitous method of monetization but it has now become the minimum requirement expected of an IM app and is therefore being slowly commoditized. This explains the move towards more premium and official stickers and further personalize, like wallpapers, pictures and ID tags.

Stickers are employed across most IM platforms. LINE, for example, made USD 10million per month in 2013, roughly 25 percent of annual revenues, from stickers. LINE and WeChat have also partnered with football clubs creating official accounts; a pervasive sport offering a lot of potential.

Purchases & payments

In-app payments made to purchase special content or goods are best at generating revenue for the apps. Monetization comes from content merchandising; games (the most effective money generators); music and peer-to-peer or retail payments (Snapcash from Snapchat).

Advertising

Advertising revenue for Instant Messaging Apps could be based on Promoted Accounts as in the case of Twitter or in Promoted Video Chat as in the example given above for Kik.

Utilities

File storage/sharing and group voice/video have become expected commodities for an IM product. It therefore offers little revenue potential considering competition is high in the cloud and innovation space from the likes of Skype and Snapchat.