Facebook Inc.'s New Feature Illustrates Zuckerberg's Next Growth Opportunity

How do social networks like Facebook and Twitter grow their businesses when user growth starts to slow? Here's one way.

Apr 3, 2014 at 10:00AM

How do social networks like Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) grow their businesses when user growth starts to slow? One way is by facilitating increased engagement by providing users with new tools to engage. Case in point: Facebook's recent update to its messenger app.

The new feature
Despite Facebook's recent announcement that it's acquiring WhatsApp, a multi-platform messaging service, in a deal valued at a jaw-dropping $19 billion, Facebook apparently still has plans for its competing Messenger app. In a recent update to the app, Facebook supercharged its group chatting.

Until now, users in Facebook's messaging app could message multiple people, but could not easily save their groups with unique identities. With Facebook's March 27 iOS and Android update, the company finally took tips from rivals, and added the important feature.

Fb Groups

Image source: Facebook.

As detailed in the latest update in the iOS App Store: "Now you can create groups for the people you message most. Name them, set group photos and keep them all in one place."

The new groups feature also allows you to add people to the conversation after it has started, giving them access to all previous messages, and notifying all the individuals in the conversation that someone has been added.

In addition to Messenger's new groups feature, the update added the ability to forward messages: "Want to send a message or photo to someone who isn't in the conversation? Just tap to forward it."

Facebook's next growth opportunity (and Twitter's, too)
While investors typically point to growing monthly active users and more effective advertising products as reasons for Facebook's fast-growing top line, Facebook CEO Mark Zuckerberg outlined another way the company can grow in its fourth-quarter earnings call.

"We're not just focused on improving the experience of sharing with all of your friends at once, although that's growing quickly, too. A lot of the new growth we see is coming from giving people the tools to share with different sized groups of people," Zuckerberg said.

This new growth can come in the form of entirely new apps, like Facebook's recent launch of Paper, or by improving sharing tools within existing apps. The groups feature within the Messenger app, for instance, will likely spark greater engagement within the app, and could even have a halo effect on Facebook's other closely connected products.

Twtr Photo Sharing

Image source: Twitter.

Twitter seems to be taking a similar route to encouraging greater engagement on its platform. With its recent addition of photo tagging for iOS that doesn't affect the limited 140-character count for Tweets, Twitter is making the platform more engaging for existing and new members.

New features, like groups for Messenger and photo tagging for Twitter, highlight yet another way social platforms can grow engagement and make their platforms more lucrative for advertisers. Investors in Facebook and Twitter should expect the platforms to continue to beef up sharing tools in the coming years. Why not? It improves the experience for users while also boosting a platform's value.

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Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of 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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Jun 12, 2015 at 5:01PM

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