The news that Facebook is in the early stages of combining the messaging features of several of its properties, as reported by The New York Times last week, raises many questions about how advertisers and users will be affected. In this eMarketer Analyst Insight, Principal Analyst Debra Aho Williamson and Senior Analyst Jasmine Enberg explain what it could mean for these two groups.
The biggest thing to know is that Facebook is not merging its three messaging apps—Facebook Messenger, Instagram and WhatsApp—into some sort of “WhatsMessGram,” at least not at this point. We say “not at this point” because as recently as a few years ago, Facebook execs pledged to operate Instagram and WhatsApp as standalone apps. But with the back-end messaging integration, that’s changing.
Could the apps eventually merge in a deeper way? It’s possible; Facebook isn’t saying much about its plans. In recent months, however, Facebook has been talking less about the size of the separate user bases for each app and more about the combined usage of all of its apps. In its quarterly earnings announcement this week, Facebook said 2.7 billion people use one of its apps every month.
In essence, Facebook is hoping that the sum of its parts will seem larger to advertisers than the individual apps. This year, we expect that Facebook will have more than $67 billion in worldwide ad revenue, but it’s growing more slowly than in the past.
Messaging is one of the three pillars that Facebook has said it will use to build future ad revenue beyond the news feed. The other two are video and stories. Aside from video, which we estimate will account for 31% of Facebook’s US ad revenues this year, the ad opportunities for messaging and stories are very underdeveloped at this point.
If and when those messaging ad opportunities do develop, it’s important to note that Facebook has already streamlined the back end of its ad buying system. When an advertiser uses Facebook Ads Manager, it has the option to select one or more placements for its ads. Those placements include Facebook feed, Instagram feed, Facebook Stories, Instagram Stories, in-stream video, Messenger, Facebook Audience Network and more. When WhatsApp rolls out advertising (widely expected to happen this year), its placements will also be part of Ads Manager.
As the number of ad placement options grows, it’s getting more complicated for marketers to target audiences across Facebook’s properties. So the more that Facebook can combine data about a user of WhatsApp, for example, with what it knows about the same user on one of its other apps, the easier it will be to track and target that person across platforms.
Integrating its messaging properties may make sense for Facebook from a business perspective, but it could create problems on the user side. If consumers haven’t done so already, they will now realize that Instagram and WhatsApp are part of the Facebook family, potentially exposing those platforms to the reputation problems suffered by core Facebook over the past few years.
It may also open Facebook up to additional data privacy issues. Even though all three messaging services will continue to operate as standalone apps, combining their underlying infrastructure means that users could eventually communicate seamlessly across platforms. In other words, a Messenger user could send a message to a WhatsApp user.
During the quarterly earnings conference call this week, CEO Mark Zuckerberg used the example of Marketplace, Facebook’s local ecommerce platform, to explain why the integration might make sense.
Marketplace uses Messenger as its primary messaging tool, which is frustrating for people who primarily use WhatsApp for messaging, he said. “We need to make it so that people can communicate across the different networks and graphs that they have … in order to facilitate more transactions and connections,” Zuckerberg said.
The idea is to increase engagement by keeping users within the Facebook ecosystem. The problem is that consumers use Facebook’s apps differently, and many want to keep them separate. That’s particularly true for WhatsApp.
Despite having some social elements, WhatsApp is primarily a platform for sending private or group messages, similar to Apple’s iMessage. In essence, it’s a replacement for a phone’s basic text and video or photo sharing functionalities and users only have to provide their mobile phone number to sign up. That phone number is then visible to a user’s WhatsApp contacts, which are imported directly from their phonebooks, though Facebook may change that in the future.
Messenger and Instagram, meanwhile, are both closely connected to the core Facebook platform, which is a forum for more-public sharing. We expect there will be pushback from users about the extent to which their identity and activities are shared across these different platforms.
Most backlash against the proposed integration is likely to come from outside of the US. Due to the popularity of iMessage, WhatsApp has made only a small dent in the US chat app market. In 2019, we expect just 9.9% of US smartphone users to use WhatsApp at least once per month.
But in other parts of the world, like Europe, it has become consumers’ main mobile messaging service. According to our latest forecast, more than 80% of smartphone users in the Netherlands, Italy, Spain, Germany and Finland will use WhatsApp in 2019.
It’s too soon to tell how significantly Facebook’s planned moves could impact WhatsApp usage – remember the failed #DeleteFacebook movement after Cambridge Analytica? – but there is the potential to give rise to new messaging platforms or cause users to switch to non-Facebook related ones. That’s exactly the opposite of what Facebook is trying to achieve.