Japan’s Zeals secures $3.9M series B round, offering conversational marketing bots

Zeals CEO Masahiro Shimizu
Image credit: Zeals

See the original story in Japanese.

Japan’s Zeals, providing messenger-driven interactive ad service Fanp, announced on Monday that it had raised 420 million yen (about $3.9 million) from JAFCO (TSE:8595) and FreakOut Holdings (TSE:6094, hereafter called FreakOut) in its series B round. This round succeeds the fundraising for a total amount of 80 million yen (estimated to be series A around) conducted last May and the one for an undisclosed amount (estimated to be seed round) conducted in January of 2015. For FreakOut, it is a follow-on investment continued from the previous round. The total amount of investment in Zeals is considered to exceed 500 million yen (about $4.6 million).

Zeals explained about the purpose of this fundraising is to enhance system development capacity, human resource including communication designer (a new job for designing the conversation between machines) or marketing through Fanp promotion activities and events. The Zeals team currently consists of 16 members (and 11 outsourced staffers). According to CEO of Zeals Masahiro Shimizu, the communication designers play a key role in the business related to interactive ad services as growth hackers for A/B testing-based growth hack tools.

As the author wrote about Infinity Venture Summit (IVS) held last December and there ZEALS won the 4th position, the firm had shifted the direction of development from the chatbot management tool to the conversational ads. Not a few web-based companies create landing pages for marketing. Unlike listing ads that aim to reach potential customers, in-feed ads linked to landing pages do not work effectively in most cases (Conversion Rate; CVR 0.8%).

Fanp (click to enlarge)
Image credit: Zeals

On the other hand, the Fanp platform transfers users from in-feed ads to messengers in order to reach potential customers, and then provides interactive ads by chatbot. Acquiring user profile, it can also follow withdrawn users and urge them to access repeatedly by shifting display timing or changing approach means. With this system, CVR can be improved to 5.7% by seven times that of landing pages. Fanp has taken up 82.7% of domestic share in chatbot service field utilized for advertising (as of December 2017). The accumulated number of messages between users and chatbots is more than 42 million and the sales growth rate in MoM (month over month) reached 136% during the past six months.

Zeals had been developing and providing two versions of Fanp in accordance with the degree of communication design (chatbot responses): normal version for general businesses and light version for media. However, the firm currently concentrates its development resource to normal version because the sales amount gained from conversion is higher in general businesses. The company has not revealed the number of its customer, but it includes excellent companies providing web services with high unit price for users, such as Atrae operating the job-advertisement media Green, Career Design Center operating the career change website @type, Advance Create operating the insurance information website Hoken Ichiba, Investors Cloud operating the apartment management platform Tateru, Ajinomoto’s marketplace of healthy drink Glyna and Parente, in addition to Wave Contact dealing with contact lens.

Zeals has commenced provision of a consistent service including in-feed ads from the securement of traffic path to user transfer, and is also considering a plan to create its own chatbot and transfer users to its advertisers using this in the future. In Japan, Indeed which was purchased by Recruit (TSE:6098) or Tenshoku EX provided by ZIGExN (TSE:3679) are leading players as web-based user-transfer media while Zeals may envision that it can dominate the chatbot field by a method similar to them.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy