At a recent Facebook Inc (NASDAQ:FB) earnings call, questions were asked about the company’s two developing social media platforms. Investors and analysts inquired about these two businesses and Zuckerberg’s goal moving forward.
Instagram has already seen some changes, through a big update released earlier this year. This update for the photo and video-sharing platform introduced some of Facebook’s targeting tools used with ads. Brands and other businesses looking to promote their product or foundation can make slideshows containing multiple pictures, and even include links.
Although Instagram is succeeding in its development, Messenger’s path to making Facebook money was not as straightforward. However, Facebook CEO Mark Zuckerberg gave investors a basic outline for the company’s plan in the earnings call.
The first step to making Messenger a cash cow was to wait for it to reach one billion users. Zuckerberg has explained before that he likes to wait until the user base is high before attempting to make the product an effective business. Messenger does not meet that standard yet, coming in at around 700 million monthly users (that are active).
This plan is similar to what the company did to improve business and the News Feed in Facebook. Zuckerberg said “The playbook that we’re gonna run with Messenger and WhatsApp is kinda similar to how we thought about building a business in Facebook and News Feed.”
In 2006, Facebook was urged to make a change to their monetization by analysts and investors. They wanted to increase monetization by placing more ads and banners throughout the website. However, the company had a different and more user-friendly approach to monetize faster. Facebook believed that these types of ads and banners would be more efficient if there was”an organic interaction between the people using the product and businesses.”
To carry out this plan, Facebook pushed companies and brands to make a free Page for their business. They then urged them to find ways for users and customers to give these pages a thumbs up (or a like). Facebook in return gave them data on the traffic coming into their Page and how they were bringing in business.
After creating this interaction between the business and the user, Facebook allows businesses to pay for a post to become promoted. This worked out for Facebook because they can ask these businesses for much more money for a promoted post over a banner ad.
Many users of the messaging app “WhatsApp” as well as some on Messenger already use the service to interact with businesses.
This spring, Facebook made their plan to make money off of Messenger a bit clearer at a developers conference. One feature they talked about implementing was a way for companies and businesses to send shipping updates, receipts, and other customer-service support tools to the user.
If this plan is anything like what they carried out with Facebook, monetization may start out slow. However, as more and more users use the tools provided to interact with businesses, they will then see some money come from Messenger. This is a more natural way than plastering banner ads onto the app.
Developing a Relationship
Zuckerberg says that when an organic relationship between a customer and business is created “it will end up being a massive multiplier on the value of the monetization down the road, when we really work on that, and really focus on that in a bigger way.”
He also requests investors for some patience in order to carry out his plan correctly.
Companies and businesses may not like Facebook’s plan as much as Zuckerberg does. They believe that Facebook’s way of creating a relationship between them and users were not feasible anymore. These brands thought they devoted too much effort and time in trying to get Likes on their Pages.
How do you think this will play out for Facebook?