About Facebook’s Strategy for Messaging Monetization

With two – Facebook Messenger and WhatsApp – of the top notch messaging platforms everyone is keen to see how Facebook will eventually launch the monetization engine on them. FB Messenger’s 700m MAU and WhatsApp’s 800m MAU are goldmine assets with huge potential. Compare what Asian messengers WeChat/Weixin, Kakao and the likes are demonstrating.

But, and that is a key learning from previous experiences on the introduction of monetization features in the core service, they don’t rush things. This year’s Q2 earnings call laid out the path for how it is going to happen and it inherits a lot of the insights from monetization of the Newsfeed. According to Mark Zuckerberg: “If you go back to 2006 and 2007, there were a lot of people that were encouraging us to just put banner ads and inorganic content into the experience” he said. “And what we decided was that over the long-term, the ads and monetization would perform better if there was an organic interaction between people using the product and businesses.”

The recipe for success is getting people used to experiences in an organic way, stupid! Don’t burden a still growing like crazy service with monetization that doesn’t feel natural to the users.

Back in those days Facebook launched Pages, allowing business for the first time to setup official accounts that consumers could subscribe to by becoming a “fan”. That was perfect groundwork for getting people used to business and commercial content in their newsfeed. Of course, a logical monetization evolution of this was to allow business to elevate and push their updates for money. Sponsored stories were born. From there it was not far to more flexible ad and update elevation and management features. Today we have just seen the introduction of auto play video ads. And there is more to come!

Imagine Facebook would have thrown paid updates and ads right into people’s newsfeeds. That would have been a huge threat for user acceptance, engagement and the outlook for today’s huge revenue stream.

The playbook for Messenger and WhatsApp will adhere to these very learnings. They put it into a volunteer type of mode where users are in full control to set up message based interaction with content owners and businesses. Voluntary is the way to go.

First signs we see is the rapidly increasing utilization of WhatsApp to subscribe to news content. Businesses can set up WhatsApp accounts which can be used to distribute content or marketing messages to connected users. They engage with their users in a direct messaging fashion. Also, users can share web content with their peeps through WhatsApp using buttons under articles, just like tweet it or share via Newsfeed.

Facebook messenger is pursuing a different flavor. Launched at F8, the Businesses on Messenger program is rolling out now. It gives users the chance to opt in to e-commerce purchase support using the Messenger platform vs. classic e-mail channels.

Certainly businesses and content owners would prefer to be able to message users unilaterally and directly but that would be a step too early at the current stage. Keep growing the service and money will come later. Don’t hassle the continuous fast growth. Do the right things at the right time. Now is the time where users are getting familiar interacting with businesses and content owners using the new messaging services. Once that has settled, Facebook can introduce chargeable features that give these brands more powerful tools.

Looking back at the original Newsfeed example this strategy has proven to work exceptionally well. Facebook is making more than $4bn quarterly with ads. Ads that have been introduced once hundreds of millions of excited Facebook users had subscribed to branded content pages and businesses. Imagine the potential lying within the combined 1.5bn user accounts that Facebook Messanger and WhatsApp jointly provide. It’s a no-brainer Facebook will report billions of additional revenue and profits emerging from these particular chat and messaging ecosystems in the future.

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