How would you monetize Facebook messenger?

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How would you monetize Facebook messenger?

Asked at Meta (Facebook) over a year ago

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gabrielsimon

Platinum PM

Apr 30, 2020

Clarify the product: So first off, I want to make sure I understand Facebook messenger’s core features. It has instant messaging between 1 or more people. It also has video and audio chat options. In addition to this there are various integrations like games, payments, ability to create Facebook groups, and gifs. There are probably so other integrations, but that gives the gist of it. Have I covered all of the core components?

Interview: Yes, you’ve hit all the important parts.

Okay, great. So now I just want to make sure I understand the problem. Are we looking at messenger cross-platform, or just a specific device type, like mobile apps? Also, are we focusing on just the US or worldwide?

Interviewer: Let’s focus on the US. We’re device agnostic here. Monetizing Messenger across platforms.

Thanks. Okay, so now I’m going to think about segmentation.

I can think of a few different user groups:

End-users of messenger. I.e. general facebook messenger users who chat among friends and family
Advertisers on Facebook’s platform (merchants that create advertisements that you see in the newsfeed)
Business and companies that are communicating with customers

Facebok’s core business model is advertising in the newsfeed and side panel. I want to focus on these advertisers and how we can generate more advertising spend from them using messenger.

So now, I’m going to map out the advertiser’s user journey:

Choose a product to advertise
Create the advertisement
Select targeting for the ad
Run the ad
Sell the product

Now, I’m going to identify pain points for the stages in the user journey. I’ll also prioritize the pain points based on impact to the advertiser (i.e. how painful it is for them).

User journey stage	Pain point	Impact
Choose a product to advertise	Not sure which product will sell best and for whom (similar to targeting issue)	Moderate
Create the advertisement	Not sure which type of advertisement will lead to highest sales	Moderate
Select targeting for the ad	Poor targeting (Paying ads for the wrong people and/or not being able to get granular enough targeting)	High (better targeting leads to high ROI). Superior targeting is why Facebook is so popular among advertisers
Run the ad	Reaching user when there is high purchase intent.	High impact. Advertising to people when they’re ready to purchase leads to much higher ROI
Sell the product	Getting people to purchase after viewing the ad	High (getting them to purchase is essential otherwise there is no ROI).

Now I’m going to come up with solutions for these pain points and then prioritize the solutions based on impact on monetization and cost to implement.

Pain point	Solution	Impact on rev	Implementation effort
Poor targeting / inability to reach the right type of people	Mine interest data from messenger text Mine interest data from messenger audio	High High	Low (though there may be privacy concerns) Medium (more complex to mine audio data)
Reaching user when there is high purchase intent.	Show ads within messenger when chat text indicates intention to purchase	High	Medium (need to determine right UX so as not to be creepy)
Getting people to purchase after viewing the ad	Allow people to purchase directly from messenger Go directly from messenger to merchants website	High High	High (requires a lot of integrations between the merchants and facebook) Low

Based on my evaluation, I would prioritize

Improving targeting by mining interest data from messenger text message
Show ads within messenger when chat text indicates intention to purchase
Allowing people to purchase products directly from messenger

In terms of measuring the success of these new features, my primary metric would be advertising spend. I would A/B test these various features and look at advertising spend for advertisers who have access to each of these features vs those that do not have access to them.

In summary, my goal was to improve the monetization of facebook messenger. I decided to focus on generating more revenue from advertisers. I identified 5 solutions, and prioritized improving ad targeting by mining interest data from messenger text messages, showing ads within messenger when chat text indicates purchase intent, and allowing users to go directly from messenger to merchants website from messenger. My hypothesis is that advertisers who get access to these features will increase their advertising spend more than advertisers who do not have access to these features

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nehagupta · Answer 1 · 2021-06-09T09:31:00+0000

Firstly want to clarify, that we are talking about the person to person instant chat/messaging application of facebook which is currently free and now company wants to monetize it.
Some of the strengths of this product are -
1. A huge network of users
2. And since this part of the broader Facebook app itself, it has lots of information about the users thus the product knows the customers.. their interests.. likes & dislikes.
While its weakness is that it is not making money currently and I think that's why we need to decide on ways to monetize it.
Also as per my understanding, company's priorities are :-
1. Customers want to interact within smaller communities to have a sense of intimacy thus focus is on reconstruct to build smaller community experiences
2. Help people build small businesses and facilitate common tasks
With such priorities, Facebook messenger becomes quite central to the whole experience.
Based on this below are the options for monetisation-
1. Targeted ads via messenger and charge advertisers based on pay per read model.
2. Allowing customers to complete tasks like shopping (enabling small businesses to sell products directly to customers), ride hailing, bill payments etc from within the chat app. Also over here small businesses can also be enabled to do commerce.
3. Selling messenger component as a chat application for customer support for different companies. For example, on Indigo site, if u want to connect to customer support then u can click on chat icon and it will open messenger window where customer can interact with the support team of the company.
Let me evaluate each of these options based on below parameters:-
1. Option 1 (Targeted ads) :-
  1. Revenue :- good revenue option.
  2. Implementation:- Considering Facebook already has targeted ads for Facebook feeds so the entire ads platform tech is already in place. Enhancements will be required for supporting ads on messenger. Thus medium effort.
  3. Customer:- Customers might not like ads in messenger at first, considering customers are used to an ad free product. But customers will adapt in some time as they are used to ads on fb platform and also we shd give an option to opt out of ads.
  4. Advertisers: Advertisers like FB as a platform to market their products/brands and this would be an additional channel and that also more personal and thus would be welcomed.
2. Option 2 (commerce)
  1. Revenue : Good revenue option. Due to the large customer base of Facebook, partners like e-commerce platforms, ride hailing platforms would like to integrated as a micro service that can be invoked from the messenger itself and Facebook can charge transaction fee for each booking, order placed via leads generated from its platform.
  2. Implementation:- This would involve integrations with various ecomm, ride hailing platforms and thus would be a large effort.
  3. Customers :- This feature would help messenger become kind of a super app and customers would be able to do everything like placing orders, mobile topups, book cab etc for the same app. Thus will remove the need to install so many apps on mobile devices.
  4. As per my understanding, commerce is something which Facebook has on its priority list and messenger can play a major role there.
3. Option 3 (Selling messenger as a chat application for customer support for various other companies)
  1. Implementation : Huge. This will require entire ticketing system to also be built + modifications in the existing chat application to allow it work for guest login as well since people might not be interested in logging in to fb via some other websites.
  2. Revenue : good option from revenue perspective
  3. Business priority : not aligned, will lead to diversion from current business priorities. The case management or ticketing system is an entirely different space and not aligned with FB mission of building communities and bringing people closer.
Based on the above evaluation, I would recommend option 1 in short term and option 2 as long term approach.

Prateek Sachdeva · Answer 2 · 2023-09-07T05:25:09+0000

Clarifying questions:

What do you mean by Meta messenger here? (Facebook messenger?) Yes or Whatsapp as well? (Just meta)
Is Meta messenger currently monetized in any way? Are we showing ads on Meta or are we asking users to pay a subscription fee on the platform for messaging/ videocalling/ audiocalling services? (Not monetized in any way)
Are we planning to monetize it for a specific user segment? (No can be prioritised)
Are we planning to do so for any specific geographic region? (India)

Goal:

Mission statement of Meta: To build products that would connect people over a social networking platform. It’s goal is to bridge space between people in terms of distance and time zones.

How does Messenger align with this goal:

Messenger is a platform where people can reach out to people that they are connected with on Facebook in terms of direct messages, video calling/ audio calling etc. It directly correlates with Meta’s vision. It is not monetized in any way as of now.

Features of messenger:

direct messages (text, images, videos, GIFs, emojis, voice notes
video & audio calls
group chats
play games on rooms
send money to friends and family

Is Messenger ready to monetize?

✅ Brand value

✅ Large number of users & PMF

✅ Mature product

✅People are deriving value from the product

Users:

I would like to segment this on the basis of frequency and depth of engagement with the product (By frequency I mean how many times are people using messenger and by depth I mean what does the average session look like for a user:

Power users (30%):

People who use Messenger daily (2-3 times)
Average session length is 20-30 minutes
Chat with more than 5 people (both connections and acquaintances)
are part of group chats
actively call people on messenger
Join game rooms
Send money/ receive money

Core users (40%):

People using messenger 3 times a week
Each session lasts 10-15 minutes
chat with 5 or less people (mostly connections)
might or might not be part of group chats.
might be placing calls (2-3 times a month)

Casual users (30%):

people use Messenger 3-4 times a month
Not more than 5 minutes every time
chat with 1-2 users

I would like to monetize this product would for Power users of the product. They are the user segment that have derived the most value of the product and would have high willingness to pay.

TAM/ SAM/ SOM calculation:

TAM: People in India with smartphones (Total pop: 1.4 B, Adults: 15+ : 980M), 60% people have smartphones: 588M

SAM: People who use messaging services, almost 80% people (470M)

SOM: People who use Facebook products, like to use multiple messaging services, have a large network. almost half of the above (235M)

Assuming that Messenger has acquired 80% of the SOM: 188M

We will be monetizing for only 30% of these: 56M

Market Overview:

Threat of new entrants: (Low)

Meta has a upper hand here because it has a large user base captured when it comes to the messaging market. Very few new players would be able to capture a substantial market here.

Threat of substitutes (High)

Presence of a lot of products like zoom/ google meet for video calling

slack for messaging

emails

Multiple products in the market that have captured a large market.

Bargaiing power of suppliers: (Very Low) (Meta’s has its own in-house tech) Everything has been built in house.

Bargaining power of buyers: (Low) People don’t have a lot of products to choose from when it comes to offering all these services under one umbrella.

Industry rivalry: (High) Messenger faces high competition from its own sister product (whatsapp). Whatsapp has strong network effect in India)

More or less we can monetize for a part of our users:

Features that we would monetize for:

Meta mostly runs on ad-driven revenue:

Contextual advertising on Messenger: This would ensure a strong ad-driven revenue. Meta is known for being a popular ad-publisher and can strategically use this popularity to sell ad-slots for contextual advertising. I would recommend this within game rooms (where people play games).
Revenue from Messenger games: Meta can build inhouse games specifically for the Messenger app and can charge users a subscription fee to play these games. Users would have two options here, either pay a subscription fee and have no ads while playing games or to opt for a freemium model where they will have ads during games and would also be required to pay extra for in-game purchases (new weapons/ extra life/ upgradations etc.)
Premium Messenger only stickers/ emojis/ GIFs/ memes: People have actively been using these forms of messaging in this day and age. This is a good opportunity for Meta to curate Messenger specific catchy stickers/ memes & GIFs where people need to pay a small fee to access these.
Sending in-chat targeted advertisements (B2B): Meta can sell ad-slots for businesses. By this I mean Meta should build its own ad-network and data management platform. Meta already has access to user data (when it comes to interests, likes , buying interests etc.) Meta can leverage this data and allow businesses to create campaigns within its own ad-network. Then Meta would use user data and accordingly send these campaigns to targeted users. This would be via a chat message. The user if interested in purchasing the service can do so within the app itself. (Integrating chatbots for facilitating buying here)