Jul 27, 2017
Mark Zuckerberg wants Facebook to move faster at making money off Messenger and there's a good reason why
For a company built on the motto, "Move fast and break things," Facebook isn't moving fast enough on monetizing its messaging apps, CEO Mark Zuckerberg said on Wednesday.
"I want to see us move a little faster here but I'm confident we're going to get this right," he said during the company's second quarterly conference call with investors.
Facebook experimented with monetizing Messenger in newfangled ways two years ago by letting businesses create so-called chat bots for the app. But those early bots were buggy and not that useful.
Fast forward to 2017, and Facebook is taking a more traditional approach: it has started letting marketers place ads inside the Messenger app, while bots take more of a backseat role.
Zuckerberg said the top goal for Messenger remains making "it so that people organically interact with businesses." The app, which has more than one billion users, has improved the functionality of bots and recently introduced a discover tab for users to find businesses.
But sticking ads into the messaging apps will provide a surefire way for Facebook to turn the products into money-makers. Competitors are already doing it, and Facebook is basically leaving money on the table right now, Zuckerberg seemed to suggest.
"This is one of the rare times in business where you can look at messaging platforms that exist and see how they've monetized in other parts of the world and have that be the floor," noted Zuckerberg in an apparent reference to chat apps like WeChat and Line that dominate Asia.
The Asian opportunity
Indeed, messaging ads — both within Messenger and WhatsApp — could provide a perfect vehicle for Facebook to boost its revenue in Asian countries, which lag the US and Europe considerably.
Facebook's average revenue per user in the Asia Pacific region during Q2 was $2.13, compared to $19.38 in the US & Canada. And the ARPU in Asia Pacific is growing at a much slower rate than in the US — up 22% year-over-year in Asia versus a 38% increase in the US.
The big prize in Asia of course is China, where Facebook is currently blocked. An ad-rich messaging product could potentially provide one way for Facebook to enter the market without compromising its committment to free speech. And if Facebook doesn't get into China, messaging gives the company one more way to grow its business in other Asian countries.
Messaging ads could also provide a better way to increase revenue from users in the "rest of world" region that's made up of emerging market economies where low-end phones and messaging apps dominate.
"I think over time we should be able to do better," than the current crop of messaging apps making money, Zuckerberg noted. "But that at least provides this existence proof that regardless of what our internal logic is of what we're doing, that someone has done it. That gives us some degree of confidence."
Still, Facebook executives went out of their way to temper expectations about the new money-maker.
CFO David Wehner stressed that there are still a lot of "unknowns" when it comes to messaging-based ads, which he said were different than the newsfeed ads that Facebook gets revenue from on its flagship social network.
And while investors can expect to see money be made from Messenger in the next five years, monetization of WhatsApp's 1.2 billion daily users remains potentially farther off, executives warned.
"It's early days this year, and it's going to continue to be early days for awhile," COO Sheryl Sandberg said.
by Alex Heath