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, 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.

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…

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