• by Steve Smith , Staff Writer @popeyesm, May 12, 2014

Conventional wisdom has always held that advertising and person-to-person communication platforms rarely mix well. This goes back to the early days of online “forums” on Web sites where CPMs plummeted along with interaction. The general perception was that as in gaming, people are too fully engaged with the media experience or each other to be readily distracted by ads. Who really wants to click away from a conversation? And who wants to see or hear an ad in the middle of a phone call, or a text-and-chat exchange? Generally interruptive ad formats seemed anathema to the experience of person to person exchanges.

That, of course, is why the latest generation of red hot mobile messaging apps like WeChat, LINE, Kik, SnapChat and WhatsApp are treading carefully -- if at all -- in the ad space. And even one of the apps that has been most aggressive in its use of inline ads. Tango was taken aback by some recent research it ran on the impact of advertising on its users.

Company marketing director Jen Donahoe told me last week that Tango had run an A/B test of users, some seeing the app’s usual ads and some not. “We actually found that the user group that saw ads had a higher engagement level than those who didn’t.” And yeah, they had the same response you and I probably just did to that last sentence. “We had to double check the numbers,” she tells me, because even they didn’t expect to see that result. But in fact, the users seeing ads were spending more time in the app.

We can only speculate as to why this is the case, but even in the six months since it started offering ad space the company enjoys sold-out inventory in the U.S. and a roster of highly recognizable clients like Walmart and marketing/media partners like Spotify and Zynga. Donahoe suspects that the app’s affinity with big brands helps solidify users’ sense and comfort in the environment.

And advertising in Tango is not sparse by any means. The company has ads inserted into the chat list of available contacts, after every five people. This is where the core communication occurs and has become a favorite spot for Walmart. Ads are also inserted between every five stories in the app’s news feed. And Tango also finds that the social discovery area where people try to find new friends is especially fertile as additional ad inventory. We find large app install ads whenever you are curious enough to click into a possible friend’s profile. Match.com has integrated some of its member profiles here and app advertisers like Lifelock and game developers have oversized units as well. 

Donahoe claims that the DSPs they work with are telling them that clickthrough and conversion rates on ads in Tango are running 2X higher than their top publishers.

She still sees the U.S. as among the most highly contested markets when it comes to messaging. In some major markets like Japan (LINE) and China (WeChat) a single entity tends to own much of the market. And as these apps try to enter the U.S. market they have enormous marketing budgets aimed at buying users. “They win in their own markets and some of the other countries, but no one has the U.S., she says. Tango is signing up 300,000 users a day she says, with a lot of the growth coming from the Middle East. In some of these countries Facebook and Twitter access is being blocked, “and we have flown under the radar,” she says. Phone plans in these regions often are extremely expensive, and so they are ripe for free messaging apps.

But about 30% of the app’s 70 million MAUs (200 million registered) are in the U.S., with about as many in the Middle East and the rest in Europe and Asia. As Donahoe points out, many of the apps in this messaging space have a range of different capabilities. She doesn’t consider SnapChat’s disposable messaging a direct competitor, for instance, but sees Tango up against the WeChats, LINEs and Kiks but is trying to differentiate with a stronger media model. Integrations with Spotify and Zynga allow for different types of media experiences that can plug into conversations, where people have things to share with one another when they run out of things to talk about.

Jen will be part of a panel on the marketing opportunities and challenges in messaging at the OMMA Mobile at Internet Week event in NY. I am especially proud of this one. Seven years ago, on the very day the iPhone was introduced, June 29, 2007, we launched this show, the first OMMA event in fact. We have had some of the leading thinkers and early pioneers of mobile speak at this show since then. And in our opening keynote, John Costello, Global Marketing and Innovation, Dunkin Brands, will put mobile within the much larger context of keeping an iconic brand as fresh as the morning’s donuts and coffee. Alex and Ani’s Ryan Bonifacino will walk us through how his company is building a next-gen app. And Melissa Stevens, Managing director, Internet and Mobile, Citi will explore how integral mobile is to the personal financial service sector. And they are the leads in what is far and away our largest collection of brand marketers at an OMMA Mobile show: The Gap, Papa Johns, 1800Flowers, Johnson & Johnson, Activision, Philadelphia Eagles, Lilly Pulitzer, Belkin, and IBM.