Saturday, July 15, 2017

Another place for Facebook to sell ads...

Facebook Unleashes Ads on Messenger as Main App Starts Running Out of Space

In fiscal year 2016, Facebook made almost $27B from advertisers, making up about 98% of revenue. It is no secret that the market has responded to this and Facebook is now more than 3x their IPO price. One of the main drivers of this has been their mobile strategy, where 80% of advertising revenue was made in 2016. Their two platforms generating revenue are the Facebook mobile app and Instagram, which they purchased for $1B in 2012 (eMarketer predicts Instagram revenue will be $2.8B in 2017- good deal, right?). However, even though the stock has performed well, Facebook is still under pressure to increase opportunities for marketers.

As this article points out, the company will be adding advertisements to its Facebook Messenger app in the coming months. The timing of this is quite interesting given competition in the space. As the article points out, the messaging app competes with Snap for advertising dollars. Facebook had previously kept ads out of the messenger app to not disrupt the user experience, but it is clear that the strategy has shifted. I guess it was only a matter of time; the bigger question for me is what they will do with WhatsApp- the free messaging service they bought for $18B a few years ago. 

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