Facebook’s New Revenue Strategy: Messenger Ads

Even an infinite scroll only generates a finite number of ad clicks. Facebook has just about maximized the amount of money it can make from people scrolling their newsfeeds, so the social media giant is shifting its ad placement focus to sister platforms WhatsApp, Instagram and most recently, Messenger.

Despite a rousing success in Q3 of last year, with 4.67 percent revenue growth (and now with more than 2 billion people on the platform), Facebook said in November that it was concerned about a potential dropoff in revenue growth as it reaches maximum ad load. Deflated share prices reflected that.

The social media giant collects the vast majority of its revenue from advertising, with just a sliver coming from payments and other fees. The popularity of videos has created the opportunity for Facebook to slide high-priced video ads into the feed, and the company has been working to find ways around desktop users’ ad blockers, yet that’s only going to unlock so much cordoned revenue. The time for innovation was ripe.

As soon as the end of this month, some users of Facebook’s instant messaging platform will start to find ads sandwiched between their recent chats and older conversations. Exact placement will depend on the user’s phone size and pixel density as well as the number of chat threads they have, Facebook told TechCrunch. The company is planning a gradual roll-out, so it may be a while yet before these ads appear on your phone.

Expect to see more of the same kinds of ads that are already appearing in your Newsfeed. Targeting will use the same algorithm that the platform currently uses, as opposed to basing ads on what Messenger users write in their conversations. The native advertising is designed to draw users in rather than jolt them out of the browsing experience.

Users will be able to chat directly with brands, giving those brands an opportunity to persuade them to buy something – plus an “in” to later send a Sponsored Message. Sponsored Messages can only be sent to users who have consented to conversations with the brand before.

That “Click To Messenger” model is one of two types of ads that exist on Facebook and will be available on Messenger. The second type, “open to URL,” can lead to a website of the advertiser’s choosing that can be rendered in the internal Facebook browser (because of course, while the platform wants to grow revenue, it also never wants anyone to leave its walled garden ever again).

Messenger’s automated assistant “M” has already learned to pick up on signals that users may want to make plans, call a ride, order food, or look up a recipe through the social media giant’s new partnership with the Food Network. M can push those suggestions to the user through the Messenger platform, asking if they would like to order food via Delivery.com, start a video chat, or send a payment to a friend.

Facebook began beta testing the new Messenger ads in January with some users in Thailand and Australia. The trials gave beta users total control of their data privacy as well as freedom to hide or report ads via drop-down menu, and those key tenets will be followed in the final roll-out as well.

Ted Helwick, a product manager for Facebook Messenger, wrote at the time, “People already spend time on Messenger interacting and conducting commerce with businesses and brands they love, and now with Messenger ads, they have an opportunity to discover experiences directly on their home tab.”

Facebook rolls out Messenger ads to advertisers worldwide this month, giving all advertisers the opportunity to choose Messenger as a placement option. The new avenue will eventually become an automatic inclusion in ad packages reaching users of the main Facebook app and Instagram.

“For developers, having a variety of ways to surface the conversational, visual and social experiences they’ve built for businesses and people is crucial,” Helwick said. “Messenger ads offer developers and businesses a way to use Facebook targeting to extend their reach to people around the world.”