Social media giant Facebook Inc (NASDAQ:FB) may be reaching peak ad saturation levels on its namesake platform, but it still has a massive opportunity to grow revenues in the messaging space.
Facebook owns the two most popular messaging apps in the world: WhatsApp and Facebook Messenger. WhatsApp recently hit the 1 billion user mark, while Messenger is used by about 900 million people.
With its total messaging footprint rapidly approaching the 2 billion user mark, and assuming a conservative average revenue per user (ARPU) of $5 per year, that’s a potential $10 billion annual opportunity. WeChat, a popular Chinese messaging app, generates about $7 in revenue per user annually, so there could even be significant upside to that estimate.
During a Q&A session in New York this week, Facebook execs weren’t shy about their plans to start leveraging their messaging audience soon. The company noted that brands have a unique opportunity to reach consumers via their apps. “Consumers are naturally behaving with businesses [on Facebook Messenger],” said Andrew “Boz” Bosworth, Facebook’s vice president of engineering for ads and pages. “Marketers can take greater advantage of that.”
Although details of exactly how Facebook will allow advertisers to reach messaging users are still unclear, some are already doing so in other countries. WhatsApp users in Brazil, for example, use the app to connect with restaurants at a very high rate, said Bosworth.
Similar abilities could be coming for U.S. users next year, as Facebook will no doubt look to turn on the ad revenue jets and take advantage of this huge opportunity sooner rather than later.
Facebook shares closed at $128.27 on Friday, up $0.18 (+0.14%). Year-to-date, FB has gained 22.56%, versus a 6.09% rise in the benchmark S&P 500.