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It’s official: Facebook is testing ads for Facebook Messenger. What does the move mean for the app’s one billion users? Tim Green, MEF features editor, looks behind the headlines…

A modest blog post by Facebook earlier this year pointed to a potentially significant moment for the social network.

The company revealed it is to conduct a small test in Australia and Thailand ‘that gives businesses the opportunity to place ads on the Messenger home screen’.

Specifically, a business will be able to place an ad below recent conversations. Pointedly, Facebook stated that ads will not appear inside a conversation (unless it’s a conversation with a brand).

The move was hardly unexpected. Facebook has never hidden its intentions to bring ads to FM (the same it not necessarily true of WhatsApp – of which more later). And since messaging is becoming more and more strategically important to the company, it has little choice.

Indeed, the move to monetise messaging reflects the great success of Facebook’s audacious strategy change in 2014. The company launched FM in 2011, but three years later it removed the messaging feature from the main Facebook app – and it also bought WhatsApp and Instagram.

Facebook was going against conventional wisdom that said you shouldn’t disperse your audience like this. But Mark Zuckerberg knew the world was going mobile and gambled (correctly) that chat apps would be the dominant platform in a smartphone era.

Last month, the company revealed financials that showed how astute its strategy has been. It reported sales of $8.81 billion in the three months ended December 31, beating analyst forecasts. And it confirmed that 1.86 billion people are now ‘on Facebook’. That’s up 10m in a quarter.

Of the $8.63 billion Facebook made from advertising, and 84 per cent came from mobile ads. However, the company itself has admitted its ad activity is at a threshold: there is a limit to how many ads it can insert in a news feed without degrading the experience for users.

Given that one billion people now use ad-free Facebook Messenger, the chat app is the obvious next target for ads/revenue.facebookmessengerads

In fact, Facebook has been ‘fattening’ up FM with commercially-orientated features for some time. Last year it launched a chatbot platform. This let developers build bots that users can add as contacts. They can then ‘talk’ to brands as if they were humans. For the brands, of course, bots represent a more intuitive and direct way to communicate with customers. And that means (potentially) better customer service and more sales.

In November, David Marcus, Facebook’s vice president of messaging products, said 33,000 developers has written 34,000 chatbots for Messenger.

Just weeks before Marcus gave his update, Facebook made some policy changes to start the commercialisation of chatbots. Specifically, it let chatbots send subscription-based messages, as well as promotional messaging (bots could not ‘upsell’ before).

Then it said developers could buy ads that run in the main Facebook news feed and open threads with chatbots in Messenger.

Another possibility is to increase inventory. Just last week, Facebook launched ‘Messenger Day‘. It’s an entirely transparent copy of Snapchat’s very popular ‘Stories’ feature, and it gives Facebook another location on which to place ads.

Then there’s payment. Facebook enabled P2P payments inside FM in 2015, and late last year it integrated payments into messages, making it easy for customers to shop and purchase without leaving the app.

Facebook says people are happy to talk to businesses over FM. It disclosed that users currently send over 1 billion messages a month to companies. So it is clearly hopeful that the arrival of ads will not be too intrusive.

Its blog post stressed that its test users will be able to hide/report specific ads using the dropdown menu. It also said advertisers will not be able to message users directly unless a person starts the interaction.

Obviously, Facebook would hope to emulate the success of China’s Tencent, which has transformed WeChat from a messaging app into a mobile platform in which a user can do pretty much everything – bank, date, play games, order taxis, go shopping. Maybe Facebook can do the same.

Meanwhile it will be interesting to see what Facebook’s flirtation with ads inside FM means for WhatsApp. Unlike FM, WhatsApp has historically been declared an ad-free zone.

Before they sold up to Facebook, the founders of WhatsApp posted a 2012 blog that rejected the ad-funded model and said “Your data isn’t even in the picture. We are simply not interested in any of it. When people ask us why we charge for WhatsApp, we say ‘have you considered the alternative?’”

At that point WhatsApp was still charging its users $1 a year. However, it dropped the policy in January 2016. So that left WhatsApp without a direct revenue source. At the time, the company stated “we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from.” However, we have yet to see what these are.

Of course Facebook is perfectly entitled to monetise its activities. It would be naive of users to expect otherwise. But there are special sensitivities when it comes to messaging.

The truth is, people perceive messaging differently from browsing a web page. It’s a much more private activity. This much was proved by the outrage that greeted a WhatsApp update last August. This gave Facebook the ability to link a phone number associated with a user’s WhatsApp account – and to use this to show them ads on Facebook.

It didn’t share conversational data or result in ads on WhatsApp. But there was unrest all the same.

So Facebook will no doubt tread carefully. But if it can get the balance right, it will have a blank canvas of over a million FM users to monetise. Wall Street will be delighted.

Tim Green

Features Editor, MEF Minute


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