Facebook’s ads marching into new apps

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Scrolling through an ad-free Instagram is now a distant memory, much like the once ad-free Facebook itself. Soon, users of its Messenger app will begin to see advertisements too, and WhatsApp may not be too far behind.

Welcome to the Facebook ad creep.

The world’s biggest social media company has squeezed about as many ads onto its main platform as it can. The fancy term for this is “ad load,” and Facebook warned investors back in 2016 that it has pretty much maxed it out. Put any more ads in front of users and they might start complaining, or worse, just leave.

Welcome to the Facebook ad creep. /VCG Photo

As such, Facebook, a free service that relies almost completely on ads to generate revenue, has to keep finding new and creative ways to let businesses hawk their stuff on its properties.

One solution is to spread ads beyond Facebook itself, onto other popular messaging and photo-sharing apps it owns.

So far, it’s working. On Wednesday, Facebook posted a 71-percent increase in net income to 3.89 billion US dollars, or 1.32 US dollars per share, from 2.28 billion US dollars, or 78 cents a share, a year ago.

Revenue for the three months that ended on June 30 rose 45 percent to 9.32 billion US dollars from 6.44 billion US dollars.

Instagram

Ads have been seen on Instagram, which Facebook bought in 2012 for one billion US dollars. It was a slow and careful rollout, and it tells us a lot about Facebook’s subsequent ad strategy.

The company didn’t want to upset Instagram’s loyal fans, who were used to scrolling through beautiful landscapes, stylized breakfast shots and well-groomed kittens in their feed. An ad for headache pills would have interrupted the flow.

Ad on Instagram. /CGTN Photo

So Instagram started off with just a few ads it considered “beautiful,” selected from hand-picked businesses. For a while, CEO Kevin Systrom reviewed every ad before it went live.

Four years later, things have changed a bit, although to Instagram’s credit, not so much as to alienate significant numbers of its 700 million users (up from 100 million in 2013). There are more ads now, Systrom no longer inspects them before publication, and while many could still be called “beautiful”, users are also likely to see generic ads not specifically created for Instagram.

By this point, though, people seem to have gotten used to them.

Messenger

Facebook has already been testing ads on its primary chat app, and earlier this month it announced it will expand this test worldwide. Paralleling its experience with Instagram, Facebook told developers and businesses they can start showing ads, specifically for brands that people “love” or that offer an “opportunity to discover experiences”, to Messenger’s 1.2 billion users.

It won't be a tsunami though, rest assured. Facebook product manager Ted Helwick wrote in a blog post that a “small percentage” of Messenger users will start seeing ads by the end of July. The company will then study that limited rollout to ensure that it’s delivering “the best experience".

AP Photo

Of course, even a small percentage of the 1.2 billion users could be tens of millions of people. But this gives Facebook a chance to see what works and what doesn’t without mass revolt.

And it highlights the importance of Facebook’s decision to spin out the Messenger app from its main Facebook app (and to start pressuring people to use it ). While Facebook billed its decision as a way to make Messenger easier to use, it also essentially doubled the available real estate for its mobile ads.

In a conference call with analysts on Wednesday, CEO Mark Zuckerberg said he wants to see the company “move a little faster” when it comes to ads on Messenger, but added that he is “confident that we’re going to get this right over the long term.”

WhatsApp and more

With its popularity outside the US and in developing countries, WhatsApp might be a harder nut to crack when it comes to ads. But there are signs it’s coming. It’s true that WhatsApp’s CEO Jan Koum promised users they can count on “absolutely no ads interrupting your communication” when Facebook bought the company in 2014 for 19 billion US dollars.

But last August, WhatsApp updated its privacy policy to reflect that the service would be sharing user data with Facebook so that it could “offer better friend suggestions” and “show you more relevant ads” on Facebook and its other properties.

That doesn’t mean that ads will appear on WhatsApp right away. But in the same post, the company also said it wants people to be able to communicate with businesses, not just people. That’s exactly how Messenger began dabbling in the advertising business.

AP Photo

What else can Facebook do?

“One, they will raise their rates on ads,” said Matt Britton, CEO of social media marketing company CrowdTap. “Because they can. The value is tremendous for advertisers right now, including for video ads.”

For eMarketer analyst Debra Aho Williamson, Facebook video presents the biggest opportunity for ad-business growth. How people will respond to Messenger ads remains uncertain, she said. But with video, Facebook is doing what people already know, taking short and long-form programs and inserting ads in the middle.

That lets Facebook attract money from “traditional video advertisers,” she said, meaning the folks who honed their talents inserting ads into prime-time shows.

(Source:AP)