Facebook (NASDAQ:FB) recently decided to let users sign up for its Messenger chat app without opening a Facebook account. This means that people who want to chat with Facebook friends but don't care for baby and food pictures can still use the app. What prompted that decision, and how will it help Messenger reach more users?
The evolution of Facebook Messenger
Facebook launched Messenger nearly four years ago, but only required users to download the stand-alone app last April to keep chatting with their friends.
Since then, Facebook added mobile payments, video calls, new location sharing services, and simple apps to Messenger, turning it into a platform of its own with 700 million monthly active users. Yet those weren't really original ideas. Monolithic chat apps, like Tencent's WeChat, offer similar features as well as integration with e-commerce sites and online games.
But looking ahead, Facebook plans to further enhance the app with Messenger for Business, which will allow online merchants to provide customer support through Messenger instead of phone calls or emails.
More than meets the eye
Messenger chief David Marcus told TechCrunch that "accountless" Messenger signups are aimed at people who can't sign up because they don't have a Facebook account, turning an account sign-up from a one-way street into a two-way one.
During the sign-up process for Messenger, users will be prompted to upload their phone contacts. By matching those phone numbers against Messenger users with registered phone numbers, the app can instantly build a contact list like WhatsApp. But unlike WhatsApp, users can also search for Facebook users through the Facebook directory. This flexible approach could trigger a wave of sign-ups among people who never used Facebook before.
This also seems like a potential way to return to China, where Facebook has been banned since 2009. If Facebook somehow convinces the Chinese government to let Messenger through while keeping its main app blocked, the company could finally reach China's 690 million Internet users again.
What about monetization?
The tricky thing about Messenger is monetization. Without access to the News Feed, Messenger-only users aren't exposed to Facebook's core News Feed ads. Facebook could generate a little revenue from app and sticker sales, but those are just pennies compared to the $11.5 billion in ad revenue its main ads generated last year.
But by connecting both Facebook and non-Facebook users on Messenger, there's a strong chance that non-Facebook users will sign up for their own Facebook accounts. For example, if non-Facebook Messenger users view Facebook profiles or photos, they might sign up to access the main app. By funneling those users back to the News Feed, Facebook could boost its networks' monthly active user base and generate more ad revenue.
Listen up, kids
Messenger isn't just designed for developing and emerging markets, however. In saturated markets like the U.S., Facebook could use the stand-alone Messenger app to win back users, like fickle teens, who previously left the social network.
According to iStrategy Labs, the percentage of 13 to 17 year-olds in the U.S. who used Facebook declined from 8.9% in January 2011 to 5.4% in January 2014. That slide directly coincided with the rise of mobile messaging apps among teens.
A commonly cited reason for that teen exodus from Facebook was that parents were using the network to keep tabs on their kids. Since Messenger is a simpler messaging app, teens get an easier way to keep in touch with Facebook contacts without having to dodge their nosy parents.
The illusion of choice
Facebook excels at offering users an illusion of choice. When teen usage of Facebook's main app declined, they flocked to WhatsApp and Instagram, although Facebook also owns both apps. With "accountless" signups for Messenger, Facebook is now letting users connect with their Facebook contacts without wading through News Feed chaos.
Granted, WhatsApp, Instagram, and Messenger don't generate as much revenue as Facebook's News Feed, but their current goal is to reach the maximum number of Internet users, rather than simple monetization. Once Facebook tethers enough users to that family of apps, it can steadily launch more advertising initiatives to generate fresh revenue from each set of users.
Leo Sun owns shares of Facebook. The Motley Fool recommends Facebook. 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.