Facebook May Be About to Take the Wraps Off Its Next Big Money Maker – TheStreet.com

8 months ago Comments Off on Facebook May Be About to Take the Wraps Off Its Next Big Money Maker – TheStreet.com

Facebook (FBGet Report) may be about to amp up the revenue-generating spigot on its next big money maker: Facebook Messenger.

TechCrunch’s Josh Constine and Jon Russel reported the Menlo Park, Calif.-based company is slated to put ads into its messaging platform starting in the second quarter of this year. The ads would come from businesses who have previously interacted with customers via the chat app inside of a chat thread, limiting the number of ads people see.

Ads in Messenger, which now has over 800 million monthly active users, could be a big opportunity, said Jackdaw Research analyst Jan Dawson.

“Facebook has been talking about using Messenger to connect businesses and their customers, and this seems like a fairly subtle form of advertising which will only be used with businesses the user has previously communicated with,” Dawson said via email.

Must Read: Here’s How Facebook Will Make Money on WhatsApp Now That It’s Free

When asked for comment on the report, a Facebook spokesperson said, “We don’t comment on rumor or speculation.”

Facebook has been tweaking how it views Messenger as a business over the past twelve months, and it appears ads are part of that continued twist as the Menlo Park, Calif.-based tech giant finds the right sauce.

“Messenger’s now 800+ million MAUs will easily attract advertising dollars and build upon Facebook’s dominant leadership position in social,” said TheStreet’s Jim Cramer. “The company and its growing ecosystem of services and apps will continue to make it a top destination for marketers moving forward.”

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Currently the number three free app on the App Store, Messenger is an important area of finding new ways to innovate and boost not only users, but revenues as well.

A formal announcement of ads into Messenger may boost the company’s share price, as analysts begin to assess the potential for added revenue from ads, with Wedbush Securities analyst Michael Pachter saying it was not built into his revenue and earnings model.

At last year’s f8 developer conference, CEO Mark Zuckerberg opened up the Messenger platform to developers, allowing Messenger to become its own platform.

Facebook unveiled new products known as Messenger Platform and Businesses on Messenger, which let app makers as well as online retailers work with the messaging application to boost their own audiences or communicate with customers.

The company has also introduced payments as part of Messenger, as well as M, its digital assistant located inside Messenger, which completes tasks and finds information for users, such as ordering tickets or finding restaurants.

In December 2015, the company also formed a partnership with Uber, allowing them to request a ride through Messenger, turning Messenger into a transportation platform. On the company’s fourth quarter earnings call, Zuckberg said more services would come to Messenger, including airlines.

The battle for customer attention via direct interaction has never been higher, either.

Earlier this week, Twitter (TWTRGet Report) announced a similar feature to the proposed offering from Facebook, allowing businesses to interact with customers directly via Direct Message. Dawson said the introduction of such a service and the proposed offering from Facebook is “likely no coincidence.”

Having ads on Messenger would mark a contrast to what Facebook intends to do with its other popular messaging product, WhatsApp, which recently surpassed 1 billion monthly active users earlier this year.

In a Jan. 18 blog post explaining WhatsApp was getting rid of its subscription fees, Jan Koum, WhatsApp’s co-founder and CEO, said the service would be experimenting with business-to-customer services.

Even though official plans have not been announced and may ultimately be scrapped, the potential for ads in Messenger is clear, says Pivotal Research analyst Brian Wieser. “Undoubtedly there is a lot of opportunity if they [Facebook] come up with the right ones for Messenger.”

Facebook May Be About to Take the Wraps Off Its Next Big Money Maker – TheStreet.com