Step 1, build a wildly successful messaging program. Step 2, monetize said messaging program. Facebook has completed step one, with over a billion users for their Messenger app. Step 2 is proving to be a little bit trickier. The social media giant has rolled out mobile commerce options, chatbots, and now ads in Facebook Messenger. Will ads finally be the way that Facebook is able to monetize their Messenger app?
Commerce and Chatbots
While chatting with a friend on Facebook Messenger and you happen to mention that they owe you $20. Thanks to Facebook’s virtual assistant M, Messenger will happily ask if you want to request a payment for that money. For a short time, it seemed that mobile commerce would be a way that Facebook used Messenger to create income. It seemed a logical assumption after Facebook hired former PayPal president, David Marcus, to run Facebook Messenger back in 2014.
Although Marcus has a background in payments, before PayPal he found Zong which processed payments for social apps and games, Facebook’s Messenger never went in that direction. While you can request payment through Messenger, like that $20 from your friend, it hasn’t been turned into a way to make profit. In fact, Facebook doesn’t even take a cut of the payments.
Facebook even rolled out group payments through Messenger. There have been fringe benefits to enabling commerce through the platform. Facebook has been working on getting users to shop through Messenger. However, in order to shop there needs to be a payment system enabled. When shopping is easier, it becomes an experience that users want to repeat time and time again.
Then, there was the bigger rollout of chatbots. Messenger boasts over 100,000 chatbots. But for now, the chatbot ‘store’ is completely free. And the Discover tab, that showcases suggested chatbots, isn’t currently taking any sponsored placements.
Facebook isn’t the only social media app to shy away from payments as a business model. Twitter shut down its commerce efforts and Snapchat’s Snapcash hasn’t been talked about much lately either.
Advertising
Instead of monetizing with commerce or chatbots, Facebook is sticking with what they do best, advertising. Last year Facebook generated $753 million from payments, mostly related to desktop games. However, that number represented less than 3% of its total revenue. Payment revenue has been down every year since 2014. Contrast that with Facebook’s advertising business which grew 57% in 2016 to reach nearly $27 billion.
Facebook has seen declining ad growth on its core News Feed ad offerings, so the new Messenger ads are perhaps coming at just the right time. Expanding the ad offerings on Messenger is expected to create a significant revenue stream. For now, there are just two types of ads available in Messenger. After a limited run in Australia and Thailand, the beta testing Messenger ads will now be available worldwide.
Facebook started with News Feed ads that directed users back to the messaging app, helping brands re-engage users through Sponsored Messages. Brands could also reach Messenger users with promotional messages within a 24-hour window after users engaged with a branded chatbot. However, businesses are not able to send a message to threads that weren’t previously opened by users. The limitations were put in place to prevent brands from overwhelming or spamming Messenger users.
In January, Facebook started putting ads inside the Messenger inbox. Users will see Messenger ads in the top tab of their Messenger mobile app. When users tap on an ad they will be sent to the destination the brand chose during the ads creation. Marketers can send users to a website or a Messenger conversation.
The Messenger ads will appear in users’ home tab within the app, and marketers can create the ads via Ads Manager and Power Editor. Messenger ads are an additional placement option for Facebook advertising. For marketers using automatic placements, Messenger is included for all support campaign objectives. Advertisers will be able to add Messenger to campaigns using the Traffic and Conversion objectives with more options like the soon-to-be-released App Installs objective.
During testing, the Messenger ads format helped Australian department store David Jones reach customers where they were already active and engaged, and helped in placement optimization across other Facebook ad properties.
With over a billion people using Messenger every month, businesses will have a great new tool for reaching engaged customers through Messenger ads. Being able to add the placement option through Ads Manager and Power Editor will make the additional options easy for marketers to incorporate. With that potential, Messenger ads looks to be the way the Facebook monetizes their Messenger app.
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