There are lots of ways to shop nowadays. In addition to just going to a store and making a purchase, there is e-commerce, mobile commerce, social commerce – all in an effort to conveniently place brands, retailers and direct marketers where consumers conduct their digital lives. Now, there is yet another newly emerging commerce model gaining traction – called “Conversational Commerce.” If the term conversational commerce is new to you, it was coined in early 2015 by Uber lead engineer Chris Messina, but it’s being talked about as a way to more effectively serve busy shoppers and deepen relationships between customers and brands.

Conversational commerce is an offshoot model that combines the best aspects of the three fastest growing digital trends right now: e-commerce, mobile transactions, and messaging apps. Specifically, it is the practice of brands or vendors initiating, completing, and servicing business transactions over messaging applications, such as Facebook Messenger, WhatsApp, WeChat, or Slack. It’s “conversational” because the experience is carried out as a conversation – either with a live agent or through an automated but intelligent "bot" -  kind of the way a natural conversation would happen in a retail store environment – except this is done in the digital realm without ever leaving the messaging app being used.

Here are 4 key things that I thought make conversational commerce an exciting trend to follow:

1.)  The convenience factor – Always-on threads allow for customers to pick up on conversations where they left off, potentially eliminating the need to re-explain your wants, needs, and problems. Combine this with the fact that messaging apps are about 75% penetrated with internet users globally (messaging apps recently surpassed social media networks in terms of daily active users), and the convenience of shopping right from your messaging app is hugely appealing. No more clogging your phone interface with dozens of distinct apps for each vendor/brand you connect with.

2.)  Intuitive navigation through the purchase funnel – you can ask questions and get the information you need as you shop, personalizing the shopping experience on a one-to-one basis. Also, today’s conversational commerce platforms can accept payments and complete orders, which is a game changer. And it avoids the dreaded call into a phone queue (which is a foreign concept to millennials anyway). This is where the interaction with humans and bots comes into play. Much is being written about the developing capabilities of bots powered by artificial intelligence; it will be a lynch pin for ensuring a positive customer experience as scale.

3.)  The collection of precise shopper behavior data – millions of customer exchanges captured, combined with the capabilities of big data to gain insights on shopper behavior and preferences, means the level of consumer knowledge and insight will be unprecedented. Analyzing consumer trends and shopping behavioral patterns will allow for smarter product planning, better pricing, and more effective execution of the shopping experience. For businesses this will drive higher conversion rates, better retention, and lower customer acquisition costs. For consumers, it will lead to making purchases faster, better, and cheaper. A win-win for all sides.

4.)  Integration potential with the Internet of Things – The potential here is very exciting. Combining conversational commerce with IoT devices opens up possibilities to serve customers in new scenarios and create incredible linkages between customers and brands. Think of a smart home AC system connected to a Nest Thermostat, telling you when it’s time to change the filters in your house. Don’t know what type to buy or where to get them? Simply send a message through the interface and the proper filter is ordered and on its way at the best possible price.  The popularity of Amazon’s Echo device is partially due to the exciting possibilities here – you can order any number of products from your Amazon profile simply by voicing commands to Echo. Digital commerce that is “conversational” in the truest sense of the word.

In a way, it seems like what is old is new again – the notion of having a conversation (i.e. personal interaction) in the process of making a purchase or using a service. Indeed, the concept is not entirely new – there have been online chat features on e-commerce websites for years, and businesses have been using text messages and push notifications increasingly in the recent past (not to mention telesales transactions). But the fact that the process is being consolidated within widely used messaging apps, combined with the use of more effective automated bots, opens up huge possibilities for this newest model of commerce - by applying technology to make shopping more seamless & intuitive.

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However, with this spotlight of attention and a huge valuation comes pressure – perhaps even a target placed on the company’s back. Snapchat’s Investors want to see some indication that the free service is more than just an easily accessible toy; they want line-of-site to eventual revenues and a business model that can support such a lofty valuation. There are numerous competitors in the free text messaging space – all with their own spin but each trying to capture the same pie of eyeballs and fingertips. Even the media and hacker community is setting its sights on Snapchat - embarrassing e-mails from CEO Evan Spiegel’s college days were made made public, and a recent hack that made thousands of Snapchat users’ photos viewable by almost anyone.

In short, Snapchat needs to (now quickly) evolve from a popular, rapidly growing fascination into a serious company that makes money. Previous predictions of an in-app purchase monetization strategy have not yet materialized. And so it was recently confirmed by Spiegel that Snapchat is planning to introduce paid advertising on its messaging app (see linked articles below). Although there were few details on how the ads will work or be presented, Spiegel did indicate that the ads will be essentially content based, and will involve “stories,” a content product of which Snapchat users view over 500 million per day.

Although this development is no surprise – most free social media and mobile messaging app companies reveal their “secret” monetization strategies to be some form of paid ads – the interesting thing here will be if Snapchat can somehow create a “game-changing” monetization system where the ad product is intertwined with great content and user-driven threads.  This element is critical for it to appeal to young users who are turned off by traditional display-based brand advertising. Yet as the below articles (from Ad Age and Adweek) on this subject hint, a good ad-based monetization strategy can still be a clever, creative, highly nuanced art form. It will have to be, seeing how the ads themselves will probably disappear as quickly as the messages – after about 10 seconds – not what you want if you’re an advertiser.

Clearly, Snapchat is highly focused on monetizing its platform: it has made some notable hires of former Facebook execs, one of the better examples of a company that has effectively monetized its user-generated content. Some say this new & evolving business model will require “brands..to figure out how to get super-creative” (Shafqat Islam, NewsCred), but I feel that the onus will be much more placed on Snapchat itself. It will need to create a killer advertising product that is deeply rooted in (disguised as?) engaging content that resonates with Snapchat’s millennial user base.

If that approach can be successfully executed (a big if…), major brands will follow and the business model will get real traction. Then the $10 billion valuation will quickly start to look very reasonable.

Read these pieces (links below) describing Snapchat’s first advertising strategies; let me know if you think they are on the right track.

Ad Age  article: http://adage.com/article/digital/snapchat-ads-coming-ceo-spiegel/295345/

Adweek article: http://www.adweek.com/news/technology/snapchat-will-reportedly-debut-ads-and-videos-159605

Earlier this month Apple unveiled their new iPhone 6 and iPhone 6 Plus to much fanfare (10MM sold in the first weekend) and strong reviews (for the most part) The most notable design feature about these devices is their larger screen size relative to previous models – the iPhone 6 Plus in particular has a 5.5 inch screen.  This puts it squarely into the “phablet” category – a crossover between smart phones and small tablets that could be used as either. Other models that have steadily caught on over the past year are the Samsung Galaxy Note 3, with its 5.7 inch screen and the LG G3 with a “5.5 screen – both of which still have a phone as a key feature. These products have been held up as differentiators in the ongoing mobile device wars between these two tech giants and others.

 These phablets have been getting increasingly glowing reviews, press, and buzz, as the 2000’s trend of the smaller-the-better phones continues to reverse itself in this decade.  In her review of the iPhone 6, Re/Code’s Lauren Goode wrote: “…I have to admit it: I’m tempted. I really like this phone. And people who actually prefer huge smartphones: you’re going to like this phone, too.” Similarly, Engadget’s James Trew loved the Galaxy Note 3: “The Note remains unchallenged in its category. Excellent battery life, a brilliant display and top performance make it an excellent all-rounder…”

These companies should be hailed for their innovation and for knowing the desires of the market, right? Sure, but I do find it interesting how fickle the electronics consumer can be, especially when they first encounter a truly innovative product for the first time - especially when the company that releases it lacks pedigree in that particular market.

Case in point: The Dell Mini (later renamed Streak 5). This was one of the very first “phablets” – before the term was even coined. It was released by Dell way back in early 2010 in an effort to get a let up in mobile devices, but its 6-inch size was met with derision and poor reviews that called out the “awkward” screen size. In fact, Engadget had this to say about it: “Dell's puzzled the world for quite some time with its outlandish Mini 5 / Streak -- at first glance it's just another Android-based MID, but a quick fiddle with it reveals the full-fledged 3G phone inside. So will it fit in a pocket? Can we carry it around like a normal phone?”  Hardcore techies were intruiged and looked past some of the early software bugs and flawed features, but the broader market didn’t know what to make of it and thus it garnerd only tepid sales. Seems like Dell, a company not known for innovation or smartphones, was a bit ahead of its time perhaps?   

 So why is the phablet now considered a brilliant and celebrated form factor? It’s a good question and a key example of how product development and marketing need to be aligned for a successful new product launch. The voice of the customer needs to be a part of the vetting process, and the benefits of new features & form factor needs to be clearly and repeatedly communicated. Proper pricing is also required: too pricey and it will not be quickly adopted, too low and “cheap” will overshadow “new & innovative.” I’m happy the phablet is finally gaining mainstream traction (and Dell deserves some credit for its pioneering try), but hopefully there are some lessons learned about what’s “old” being “new” again.

As Facebook makes its final preparations to go public in the next month or two, there must be a tremendous amount of bustle taking place within the company. They are trying to imagine life as a public company: regular filings with the SEC, full disclosure of many key operating and financial figures, and of course the constant scrutiny of every investor, analyst, and pundit in tech and Wall Street.  Their user base, currently at about 850 million, needs to continue to grow and must also begin to generate revenue. Ads are becoming more and more prevalent on the site, and reaction from users (so far) seems to be muted. However, Facebook cannot ignore that if they are to have a successful run as a public company they must continue to grow – in terms of users, user engagement metrics, and in terms of revenue channels and opportunities.

How is Facebook coming at these challenges? By being aggressive and getting bigger of course. Its recently announced purchase of Instagram for $1 billion ( http://dealbook.nytimes.com/2012/04/09/facebook-buys-instagram-for-1-billion/?_php=true&_&_r=0 ) so close to the IPO is not a sign that Mark Zuckerberg is distracted or confused. Rather, I see it as a shrewd move to deepen their presence in two key and area in which Facebook is weak: photo sharing and mobile. Facebook will gain much needed expertise in photo capture, as social media engagement is becoming more and more about expression through photos. Similarly, as the cameras on smartphones continue to improve, more users will be taking mobile pictures and will want to post them immediately. Instagram will bring expertise and technology in both of these areas into the Facebook fold – that is why they paid so dearly (about 2x of recent valuation estimates) for the company.

I believe it will pay off for Facebook in the not too distant future. With the Instagram purchase they will have new marketing channels and users to satisfy their growth-hungry investors. They will have mobile expertise that will allow Facebook to better monetize their existing social media platform in an increasingly mobile world. Users will benefit from having a better experience overall – with both platforms. Facebook’s lawyers may not like being so busy working on an IPO and an acquisition at the same time, but as a strategic way to prepare for where your customer is going to want to interact, It seems to me that Facebook will be a very interesting public company to watch.