See the original story in Japanese.

It has been around one year since we last reported (in Japanese) on Zeals. The company, which stems from producing interaction software for robots such as Palmi and Sota, raised an undisclosed amount of funds in January of 2015 from Will Group (TSE:6089), a major human resource (HR) service company in Japan.

Zeals announced on Thursday that they have raised over 80 million yen (about $720K US) from Japanese adtech leader FreakOut Holdings (TSE:6094). In conjunction with this, they pivoted from producing the API for creating chatbots called Bot Tree and re-launched it as the chatbot management tool Fanp. The company will collaborate with FreakOut on strengthening their sales, development, in addition to international expansion.

While Bot Tree made a dazzling debut in May of 2016, according to Zeals CEO Masahiro Shimizu, there was a continuous struggle in providing the service. Thanks to the offer of a free trial, hundreds of media sites signed up, but on the other hand, the amount of sites leaving was also great.

Shimizu, who felt there was a problem in the service, determined to improve it by working together with media companies. The company joined forces with Iid (TSE:6038), developing and offering multiple online media projects, to jointly develop services. After getting wind of this, major companies such as En-Japan (HR service company, TSE:4849), the Mainichi Shimbun (newspaper publisher), and Career Design Center (HR media company, TSE:2410) introduced Bot Tree on their media sites. Reflecting the opinions of such companies, Zeals set about making changes to the interface to birth the new and improved Fanp.

Just as The Bridge also distributes newsletters, general media sites often send out email newsletters in order to raise reader retention (actually, engagement more important than retention). In the beginning, the rate of recipients who open these email newsletters is never high. Zeals uses chatbots to guide messenger (Facebook Messenger) users and it is said that the average opening rate is 72%, with an average withdrawal rate of 7.2%. It is 15 times higher than the opening rate of average email newsletters.

When we look at the fee structure of Fanp we might be reminded of Line@, the messenging giant’s ad service plan for business users, but for now Fanp is only available with Facebook Messenger. Fanp generates a database based on profiles and attributes acquired from Facebook when the user begins to use their bot, and it also has a CRM (customer relationship management) function that allows the media owner to reach the user by specifying conditions.

Shimizu recently had an opportunity to listen to Hiroto Kobayashi, CEO of Japanese leading online media publisher Infobahn, and he became aware that the media of the future is an era of increasing the engagement of the audience rather than creating a vast and shallow audience.

Shimizu said:

All the media site owners want to do e-mail newsletters, but the newsletters can’t tell who the readers are or their preferences yet. SNS covers this to a degree, but even if you get a lot of ‘likes’ you might not be able to reach a large audience. There just isn’t any really good channel.

So, next time you’re going to try to make an app, the CPA to get people to download the app becomes high. Ultimately, it is the push notification feature that is useful with apps. If it’s just a push notification, can’t we do that with messenger? Then let’s try chat media on messenger. That’s our proposal.

In addition to launching Fanp, the chatbot management tool designed for online media sites, they also released Fanp Biz for enterprises. While Fanp strives for an alternative channel for attracting users with email newsletters, Fanp Biz is the one specifically for enterprises aiming to replace their product landing pages.

Shimizu explained:

Now that it’s possible to lead users to messenger with Facebook ads, we can also bring in the bots.

By letting the bot accept documents and make appointments, I think we can obtain an overwhelmingly better user response than landing pages do.

Previously Zeals was a strong advocate of Natural Language Processing (NLP) in the development of conversational AI engines, but by switching to ”tap talk” (the user does not input text but instead selects the appropriate choice from multiple options presented in button form by the chatbot) between users and chatbots, they can minimize the resources needed for NLP development.

Shimizu added:

If we were still obsessed with natural language analysis like before, it would mean we’d have to develop in each language in order to go international, and obviously this makes it difficult to catch up with overseas competitors. ‘Tap talk’ is our way of overcoming this and moving towards international expansion.

At FreakOut there are many clients in Japan and abroad that use DSP (demand-side platform) / DMP (data management platform) and so on, and because they have headquarters overseas we have great expectations for international development, so that is what led to financing and collaborating with them.

When asked about their future development, Shimizu dropped the phrase “Communication Ad Platform”. This is when the media can use bots to round up readers, and perhaps next up on Shimizu’s plate is to monetize the next bot channel. There is a possibility that the media will be able to charge advertisers by having their bots relay advertising messages or by having them direct users to other sites (at the present time, there is no word from Facebook about regulating this).   

Zeals wants to deliver an experience of a hub of bots that can connects them each other to better serve users of Fanp and Fanp Biz.

Translated by Amanda Imasaka
Edited by Masaru Ikeda