On today’s Facebook earnings call, investors asked several questions about two fledgling businesses: Instagram and Messenger.
We know the plan for Instagram. Earlier this quarter, Facebook rolled out a major app update for Instagram and announced plans to open up all of Facebook’s ad targeting tools to the photo sharing service. It also now lets brands use a new format where they can create slideshows of multiple photos, with links.
Messenger’s road to dollar signs hasn’t been quite as clear, but CEO Mark Zuckerberg laid out Facebook’s plans much more clearly during the earnings call.
He’s said in the past that the company believes in waiting until its products hit 1 billion users before focusing on turning them into meaningful businesses (read: revenue drivers), and Messenger, with 700 monthly active users, nearly hits that landmark.
“The playbook that we’re gonna run with Messenger and WhatsApp is kinda similar to how we thought about building a business in Facebook and Newsfeed,” Zuckerberg said.
In early 2006, investors and analysts pushed Facebook to monetise faster by plastering more banner ads on its site. Instead, though, Facebook decided that ads and monetisation would work better “if there was an organic interaction between the people using the product and businesses.”
So, it encouraged businesses to join Facebook by creating Pages for free. It pushed them to try to get other users to “Like” those pages, and gave them Insights to see how their Pages were driving business.
From there, Facebook started letting businesses pay to promote posts. Today, Facebook can charge much more for Promoted Posts than it can for banner ads it serves on the side of its site.
“Messaging I think is going to be pretty similar,” Zuckerberg said.
Building on “organic interactions with businesses”
Right now, some people in WhatsApp — and to a lesser extent Messenger — use the service to communicate with businesses.
At its developers conference this spring, Facebook said it was going to start letting brands and businesses use Messenger to send customers receipts or shipping updates for products they bought or handle any other customer-service issues.
Instead of forcing monetisation right now, it wants to get more people using those tools, and then find a natural way to squeeze some money from brands.
“The long-term bet is that by enabling people to have good organic interactions with businesses, that will end up being a massive multiplier on the value of the monetisation down the road, when we really work on that, and really focus on that in a bigger way,” Zuckerberg said. “So we ask for some patience on this to do this correctly.”
Although this explanation makes sense for Facebook, it might spark some caution for brands.
Businesses have argued that the way that Facebook emphasised the importance of “Pages” and “Likes,” then decreased the organic reach of those things felt deceptive, since they had put significant time and effort into something that was no longer as effective.
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