KakaoTalk's Revamp: Boosting User Retention and Engagement

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KakaoTalk Revamp and the Debate Over Increased User Engagement

Kakao, a leading South Korean tech company, recently announced that the average daily user stay time on KakaoTalk has increased by approximately 2 minutes compared to the third-quarter average following a major platform revamp. This development is seen as a positive step for Kakao, which aimed to boost user engagement. However, the IT industry has raised concerns about whether this growth is truly "healthy."

During the third-quarter conference call on the 7th, Kakao CEO Chung Shin-a highlighted the challenges of increasing user stay time on a messaging platform. He mentioned that the stay time rose by over 10% compared to the third-quarter average after the revamp. Before the changes, the daily average stay time was around 24 minutes, but it has now approached 26 minutes. Chung emphasized that the company aims to achieve a 20% increase target.

Despite facing criticism from users after the September 23 revamp—which redesigned the 'Friends' tab to resemble Instagram—there is evidence that users are spending more time on KakaoTalk. However, some analysts suggest there may be undisclosed factors behind the increased stay time.

According to the IT industry, while the usage rate of the 'Friends' tab among younger generations declined post-revamp, it increased among users in their 50s and 60s and older. Kakao initially aimed to attract younger users who had shifted to platforms like Instagram and Telegram, but the results did not meet expectations. An insider in the internet industry noted, “It’s natural for companies to highlight favorable metrics in earnings reports,” and added, “If indicators like gift transaction volume, profile photo replacement rates, short-form video views, or open chat room usage had improved, they would have been disclosed alongside the stay time data.”

In reality, gift transaction volume, profile upload counts, and open chat conversation numbers reportedly decreased after the revamp. Some argue that to assess whether the stay time increase is meaningful, metrics such as the number of active users on the 'Friends' tab and usage rates excluding the top 10% of users should be examined. The key is to avoid falling into the “average trap” by scrutinizing detailed data.

User Concerns and Potential Manipulation

Users also claim the increased stay time includes "padding." One user said, “After a traffic accident, I had to exchange contact information, but the screen was flooded with the other party’s photos, forcing me to spend time hiding unwanted posts.” Another noted, “When I can’t recall a name, I scroll through the friend list, but now I have to re-enter the list after accessing the ‘Friends’ tab, which adds time. Even if entering the list takes 1 second, doing this 10 times adds 10 seconds.” The extended stay time, they argue, stems from adjusting settings and hiding posts—a process that inadvertently increases usage duration. With profile uploads declining, such activities might explain the rise in stay time.

Financial Performance and Future Outlook

While Kakao reported its best-ever consolidated quarterly performance, the operating profit of its core KakaoTalk business decreased by 1.1% year-on-year. The company also saw a 17% drop in operating profit in the previous quarter. Kakao’s management now faces pressure to reverse this trend through the KakaoTalk revamp. The first results of the revamp will emerge in the fourth quarter, the peak advertising season.

Key Takeaways

  • KakaoTalk's revamp led to an increase in average daily user stay time by 2 minutes.
  • While this is seen as a positive development, the IT industry questions the authenticity of the growth.
  • User feedback suggests that the increased stay time may include "padding" due to changes in the platform's design.
  • Financial performance shows mixed results, with a decline in operating profit for KakaoTalk.
  • The impact of the revamp will become clearer in the upcoming fourth quarter, which is a critical period for advertising revenue.

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