Thoughts on Messenger business ecosystem

Andrew BosworthMonday, May 05, 2014 2:26 PM

This is a very compelling vision. We have been talking a lot in the ads group about considering pay for performance arrangements (Cost Per Acquisition (CPA), rev share on cars sold, that kind of thing) and this would be an elegant way to bridge the gap.

There is one thread missing at the bottom that I would add that I think makes this even more compelling which is closing the loop with a small business CRM so we can actually use the relationship between feed and messenger to accelerate both sides of the business. For example ensuring that businesses have an ability to buy ads in feed targeted to everyone who is talking about their restaurant or interacting with their app through messenger, and then have those ads drive people to activate in messenger¹ (Editorial note 1)Editorial · 1With hindsightBosworth adds the step the note lacks: use paid reach in the feed to start conversations, rather than wait for inbox inventory. In February 2023 Zuckerberg told investors that click-to-message ads were “now at a $10 billion run rate,” and he still spoke of messaging as the next “pillar” to come.SourceMeta Platforms Investor RelationsMeta Platforms, Inc. (META) Fourth Quarter 2022 Results Conference Call1 Feb 2023. This is probably at the intersection of pages, ads, messages, and identity.

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Sheryl Sandberg5/5/14, 8:22 AM

I love the basic vision - performance-based ads. Lots of work to do to make this happen so we need to prioritize, as Mark points out.

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Mark ZuckerbergMonday, May 05, 2014 1:09 AM

In this note, I'm going to sketch out how I think the Messenger business ecosystem will work.² (Fact note 2)Fact · 2With hindsightThis thread is public because the app developer Six4Three submitted it in its California lawsuit against Facebook as Exhibit 184 (pages FB-01366934 to FB-01366948) to a declaration by its lawyer David S. Godkin, in a version marked as sought to be lodged under seal. NBC News published the exhibits in November 2019 among almost 7,000 pages of leaked documents that it says were first leaked anonymously to the journalist Duncan Campbell. We did not find it in the two Six4Three selections the UK Parliament's DCMS Committee published, and we have not seen Facebook confirm or dispute this copy. The sriramk.com PDF reproduces exhibit pages 2 to 14 and leaves out Andrew Bosworth's reply.SourcesNBC News (Six4Three v. Facebook sealed exhibits, Exhibit 184, PDF pages 3551–3566)Sealed exhibits from Six4Three v. Facebook (658 MB PDF)Nov 2019NBC NewsLeaked documents show Facebook leveraged user data to fight rivals and help friends6 Nov 2019sriramk.com (partial copy of Exhibit 184)zuck-messenger-ecosystem.pdfNov 2019

At the highest level, I believe Messenger will be a performance-based ads business.³ (Editorial note 3)Editorial · 3Known at the timeZuckerberg settles the business model in three sentences: not brand ads, which need reach that an opt-in inbox cannot give, and not payment fees, which cannot price-discriminate. Charging per action fits a channel with few impressions, but it commits Facebook to building the conversion plumbing (payments, stores, automated replies) before it earns much from any of it. That is, I expect businesses to pay us to get people to perform concrete actions within Messenger or within their stores.

I do not believe Messenger is a good medium for brands ads because people need to choose to open messages, which makes it inferior for mass reach of rich content, especially compared with our other products like News Feed and Instagram.

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So even though businesses will bid to pay us for performance actions like getting someone to buy something or getting someone into their store rather than paying us for the payments directly, building out payments and transactions is strategically important despite not being our direct business. In fact, I think our ideal strategy is to give away payments for free -- or at no profit margin for ourselves -- in order to build up the transactional capacity of our network⁴ (Fact note 4)Fact · 4With hindsightOn 17 March 2015 Facebook added person-to-person payments to Messenger, rolling out in the US, and described sending money as “easy and free.” We have not found Facebook reporting whether free payments raised the value of Messenger ads, the payoff the memo expected.SourceMeta NewsroomSend Money to Friends in Messenger17 Mar 2015 so we can ultimately have the best performing ads business.

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The first experience -- a business messaging you out of the blue -- is where I expect most of our business to be over time. However, it's also one of the most sensitive experiences that we need to be careful with. The whole value proposition of Messenger is that it is a high signal channel where every message you receive has an expectation of intimacy and urgency. If we start buzzing your pocket with ads daily, then we could easily destroy this experience.⁵ (Editorial note 5)Editorial · 5Known at the timeThe sharpest line in the note names the asset the business model could destroy. Zuckerberg's answer is sequencing: person-initiated threads first, silent messages later, paid pushes last. It treats the inbox as a resource to protect, which also caps how much ad inventory the plan can count on.

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Instead, I think we should build an automated system that understands basic natural language so that business entities can respond automatically and instantaneously to people.⁶ (Fact note 6)Fact · 6With hindsightAt F8 on 12 April 2016 Facebook introduced a new Messenger Platform; its newsroom said bots could provide “automated subscription content like weather and traffic updates” and “receipts, shipping notifications, and live automated messages.”SourceMeta NewsroomTechnology to Connect the World: F8 Day One Roundup12 Apr 2016

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Arguably, WeChat is stuck at the stage of running ads in a secondary discovery tab because they took the easy money and never built out a full enough ecosystem to be able to monetize the main inbox where most of the traffic is. They're still doing at a bit more than ~$3 per person annually, but our goal is to reach the monetization levels we see in News Feed of greater than $10 per person, if not more.⁷ (Fact note 7)Fact · 7Known at the timeThe memo claims WeChat earned “a bit more than ~$3 per person annually” and that News Feed earned “greater than $10 per person.” We have not found an independent source for either figure, nor any Meta figure for Messenger revenue per person.SourceNBC News (Six4Three v. Facebook sealed exhibits, Exhibit 184, PDF pages 3551–3566)Sealed exhibits from Six4Three v. Facebook (658 MB PDF)Nov 2019

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This meta-assistant vision may seem far-fetched right now.⁸ (Fact note 8)Fact · 8With hindsightFacebook introduced M in August 2015. It stayed in private beta, relied on humans behind the scenes for the most complicated queries, and in January 2018 users were told the service would end on 19 January.SourceTechCrunchFacebook is shutting down its standalone personal assistant “M”8 Jan 2018 It's possible we don't need to start working on it today. But I would.

If we can succeed in building the most useful assistant -- for which the most important step would be getting as many businesses as possible into Messenger -- then this could actually be the future of search in addition to a big part of the future of advertising and commerce.

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