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Monetising Messenger: Facebook’s latest inventory development

By James Mortimer, Paid search strategist

iCrossing UK

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February 3, 2017 | 3 min read

This week Facebook released another massive earnings report that once again was way ahead of analysts’ expectations. At the end of Q3, when Facebook last released their earnings report, iCrossing commented that it would be interesting to see how much further this growth could expand throughout the highly competitive Q4 holiday season.

Facebook seeking head of news partnerships

Messenger past the one billion users mark last year.

Q4 2016 revenue from mobile ads was up 80% from the previous year, which shows how effective some of Facebook’s key mobile focused ad products, like canvas and leads ads, have been at helping fuel successful holiday campaigns. Facebook’s giant user base continued to grow ahead of Wall Street’s expectations. In December 2016, there were 1.23 billion daily active users, which represented a 23% uplift compared to the same period in 2015.

One of the few complaints financial analysts had over the Q3 earnings report was that Facebook was reaching peak ad load. This meant revenue would be hard to grow in the future as they wouldn’t be able to serve more ads to current users through their existing inventory.

To combat this Facebook is taking steps to expand the amount of ad inventory that’s available on the platform by allowing certain brands to run adverts in Messenger.

Facebook has begun a small trial of running adverts in Messenger in Australia and Thailand. This is significant because Messenger is one of the few areas of Facebook’s ecosystem that doesn’t generate revenue.

Last year Facebook announced that Messenger had reached the one billion user base milestone and more and more businesses are now using the platform to communicate with their customers.

According to press reports, the adverts sit in the middle of the opening Messenger screen and take up roughly a half of the display.

Facebook says they won’t start placing adverts in conversations unless a user clicks on an advert to start a direct messaging conversation with a business on Facebook.

Since direct messaging is such a private experience it will be interesting to see how users react to seeing these adverts. For advertisers, however, the development offers a great opportunity to target consumers in a really personalised and, if done correctly, useful way.

Facebook’s other messaging app, WhatsApp, which it famously bought for $19bn in 2014, currently shares data with Facebook but doesn’t generate revenue independently. If Facebook is able to run ads successfully in Messenger it’s likely similar strategies could be applied to WhatsApp.

James Mortimer is a paid social strategist at iCrossing

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We are iCrossing. We build seamless digital experiences that influence consumers to act. With unrivaled access to Hearst’s powerful consumer insights, we uncover...

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