Line, the Japanese communications app, officially entered the Pakistani market in August 2014, announcing its arrival with a blitz of advertising and publicity. Popular local celebrities were signed up to endorse the messaging service, primetime television slots were reserved for targeted adverts, and a number of competitions for free giveaways such as vacations and motorbikes were announced. Pakistani consumers were hooked. It seemed as if the Japanese firm wanted to acquire users quickly, irrespective of what it may cost. Crowding out local rivals through its financial muscle was perceived to be a priority.
One year later, the strategy seems to be paying off. Bilal Farrukh, country manager for Line Pakistan, tells Tech in Asia that they’ve grown by 600 percent in the last 12 months alone, but declined to reveal absolute numbers."It’s been really encouraging, and more than our expectations," Bilal adds. "Our audience is loyal and now we’re planning on looking into other things."
But why did Line decide to enter Pakistan at a time when most tech giants and VCs were treading carefully? Bilal identifies it as a huge potential market. He explains the country is on the cusp of widespread public acceptance of web-based services and Pakistan can be categorised as one of the "bigger markets," alongside India, China, Brazil, and Indonesia. Furthermore, it was important for Line to step in and capture the space before the market exhibited signs of maturity — he likens it to the "frenzy" currently engulfing India. "Pakistan is just a few years behind India, and growth patterns are similar. In terms of the numbers, it’s very promising. There are over 130 million mobile phone users, and smartphone sales rising steadily. The market will blow up very soon," he explains.
Economic indicators are also getting better — it seems like if things carry on in this direction, it’s only a matter of time before everyone starts jumping in.
But despite these giddying growth figures, Bilal explains that monetisation is not a priority for Line in Pakistan at the moment. They’re more focused on consolidation and expansion of their user base — and determining which components of their international suite of associated services to bring into the country. Bilal claims Line currently occupies second position in the instant messaging space in Pakistan, behind WhatsApp, but there’s plenty of room to grow as high-speed internet is introduced in more parts of the country.
I try to press Bilal into revealing which services they’re seriously considering but he refrains from giving a straightforward answer. "We’re looking into content, ecommerce, payments," he explains. "But we haven’t decided which ones."
But more incessant questions regarding Line’s strategy follow. Bilal hints at an eventual entrance into the payments space and says, "it’s an interesting market in Pakistan right now."
Line is a global company that strongly focuses on localisation. It looks into each region individually and examines what could potentially disrupt the market. We’re very localised when we go to different regions.
If true, then this could prove to be a very smart decision for the company. As ecommerce steadily gains traction in Pakistan, it’ll help foster trust in web-based businesses as a whole. Rising internet penetration will eventually result in a number of on-demand (O2O) services gaining popularity. Payments are a crucial link for the ecosystem to succeed as a whole; if done right, then each and every player stands to benefit.
In a relatively unexplored market like Pakistan, bigger companies such as Line, Facebook, and Google will find it easier to disrupt the industry. Consumers in the country are in the habit of using cash payments, so for online payments to succeed it will need a big player to foster trust and alter habits. However it remains to be seen whether Line will make the first move and try to inculcate this trust.
Part of the reason for Line’s growth has been partnerships with local telecommunication companies, explains Bilal. While the conditions in each partnership varied, they revolved around free data packages for people using the app, free downloads, and, in some cases, having the Line app pre-installed in certain smartphones. Bilal says they’re also experimenting with bundle packages; similar to the ones telcos in Pakistan offer for services such as Facebook. This strategy helps both Line as well as the telecommunications company as it gives insights into what works and what doesn’t. Operators are learning the data usage mindset for their consumers — and Bilal claims one thing they’ve learned is that in the case of Line, usage remains the same with or without a free data plan.
Line’s broad range of partnerships — with cinemas, restaurants, media companies, ecommerce startups, and celebrities — was encouraged because of a desire to experiment and see what works. For many of their partners this was a channel they were previously unfamiliar with and hence eager to learn. "They wanted to identify the difference between what a messaging app can provide versus a social app like Facebook — which until then had been the primary method of communicating to their audience," he stresses.
Similar to other countries it operates in, Line has official accounts in Pakistan for celebrities, businesses, and brands. These are akin to verified official Facebook pages, but the key difference is their reach. Messages sent on an official Line account will reach each and every person signed up as it is a communication platform. However, in social apps such as Twitter, Facebook, and Instagram — where celebrities have a large following – the nature of the algorithm is such that there’s no way all their fans are notified about updates. Unless they invest money in advertising, it’s difficult to constantly communicate with fans.
"We want to experiment and we want Pakistani brands to experiment. We help them with content creation and share our international practices with them so that they also learn."
Official Line accounts are usually only available for a fee; Bilal says they’re among the top three revenue streams for Line globally. However, because monetisation isn’t a priority in Pakistan, they’re offered to celebrities and brands in the country right now for no charge whatsoever. Ostensibly, this decision was taken to drive more app installs. Bilal claims engagement metrics for official accounts are very high — in one case, a brand with 20,000 friends on their account asked for followers to send in a one-minute-long video as part of a contest. There were over 3,000 submissions in less than a day.
Line is a very active medium. When you get a message it’s like a SMS that you have to read it. So basically all the partnerships we have done, is us learning how entertainers and celebrities can use line in Pakistan.
Understanding consumer preferences
So in the year that Line has been closely involved with the Pakistani market, what insights has it gleaned into user preferences? Bilal indicates the South Asian consumer has drastically different tastes when it comes to its wildly-popular stickers. He says: "In Asian markets like Japan, Thailand, and Taiwan, sticker chat is very popular. We make about 20 percent of our annual revenue from the sale of stickers alone. But in Pakistan and India, we had to do a lot of experimentation and eventually understood they don’t look for cartoons or cute stickers, but for more relatable characters."
Hence, in addition to the standard suite of stickers it has in Southeast Asian countries (Hi, Cony!), Line offers users in Pakistan and India a number of different options. These have been primarily designed by local artists — as they have a better understanding of indigenous preferences. In Pakistan, users don’t have to pay for the locally-designed stickers yet, but there are plans in the future to partner with telcos and pay via pre-paid mobile phone topups. But this is a cumbersome workaround, and the ideal solution would be to invest in building a payments ecosystem.
I’m intrigued to know which parts of Pakistan have witnessed the strongest growth and adoption for Line. My assumption is that residents of major urban centres were already predisposed to using WhatsApp and would therefore not be amenable towards switching to Line — simply because of the critical mass problem. As high-speed internet services spread rapidly to smaller towns and cities, coupled with Line’s advertising blitz, it would be logical to think users in these areas would adopt the communication app. Encouragingly, Bilal says even he’s unaware of precise statistics. Apparently Line implements very strict internal privacy policies and jealously guards its user data. It doesn’t track location data down to a city nor ask users for private information such as age, gender, or interests. Even senior executives cannot simply pull out whatever data they fancy. "And all of Line’s messages are encrypted," he adds.
As for the long-term, Bilal is confident and assertive in his vision. He wants Line in Pakistan to eventually transform into the "life platform" exhibited in Southeast Asia — where all aspects of users’ lives are encapsulated in the app. Whether it’s entertainment, buying movie tickets, ecommerce, hailing taxis, or chatting with friends, the goal is to reach that standard. "That’s the strength of Line," he smiles.
"Everyone’s very positive about the future. So far what they’ve seen has significantly built the confidence to explore more."
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