Facebook introduced Businesses on Messenger earlier this year, and it's far from complete. Image source: Facebook.
When it comes to messaging, Facebook owns the two kings of the market: WhatsApp and Messenger. Combined, the two apps have 1.6 billion users and are each well on their way to 1 billion users apiece. And while there's some overlap, WhatsApp and Messenger are relatively complementary, with WhatsApp winning some markets and Messenger winning others.
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But the duopoly Facebook owns in messaging isn't even its biggest advantage. The fact that Facebook owns an identification layer for most of its users carries an advantage the competition will never obtain. Being able to connect an ID with a user enables Facebook to provide so much more value in its messaging apps, which means it doesn't have to rely on cheap gimmicks like stickers and filters for monetization.
The world is people-based"We see the world as people-based," Facebook's head of messaging products, David Marcus, told Wired Magazine. "If we can recreate that, it reinvents mobile interactions from the ground up."
He says the current mobile landscape is app-based, not people-based, which means businesses are constantly pushing their apps on people, and people are constantly using apps to connect with businesses. The latter might not be so true, however, as there's only so much real estate on an individual's smartphone app launcher, and Facebook apps take up a bunch of it already.
That's where Facebook's opportunity with Messenger comes in. It can use its user IDs and match them with customer's emails that they provide at checkout in-store or with an online order. The business can then interact with the customer via Messenger instead of its own app or email -- no extra work necessary. Marcus points out that email is very limited on mobile, since all you can do is click a link to a mobile web page where you're forced to authenticate yourself; it's a real pain.
With the built-in identification in Messenger, there's no need for authentication, and businesses can share rich content. Facebook demonstrated this earlier this year with a couple of select retailers from whom users can get receipts and shipment tracking information. What's more, if a user wants to buy another item from that business, he can just open up the thread and ask for another widget. The entire customer history is saved in Messenger.
That's the shift Marcus wants to make; from using individual apps to having conversations with businesses. Nobody is better suited to help businesses make that transition than Facebook, and as a result, it stands to attract a lot of businesses to Messenger.
1% finishedJulien Codorniou, Facebook's director of global platform partnerships, told Wired that "We are 1% finished." He envisions entire businesses built on top of Messenger, including "e-commerce, utilities, travel, [and] dating" businesses. Facebook has already partnered with one airline, KLM, and David Marcus continually brings up communicating with airlines as an example of an interaction that would be better on Messenger than in its current state. But the idea of a dating app built on top of Messenger is intriguing.
The online dating market generated $2.2 billion in revenue in the United States alone last year. If a company could tap into Facebook's social graph and personality profiles, it could produce a better and unique online dating experience on top of Messenger. Facebook could surely take a cut of such a service.
That's just one example of how Facebook can capitalize on its identity layer in Messenger. Investors should expect Marcus and his team to continue looking at ways to connect businesses with users and take full advantage of the identification information and personality profiles Facebook has on its users. In the end, Messenger should produce significantly more revenue than its counterparts that sell stickers and other digital trinkets.
The article Facebook Inc's Biggest Advantage in Messaging originally appeared on Fool.com.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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