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Who Can Benefit From Facebook's Messenger Platform?

By Adam Levy - Jan 11, 2016 at 8:18AM

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Messenger has some problems, but its strengths fit well with one particular group.

Early Messenger Platform apps just allow users to send photos or videos. Image source: Facebook.

When Facebook (META 1.70%) unveiled Messenger Platform back in March, it hinted to Facebook's ambition to make a business out of Messenger. Developers can create apps that integrate with Messenger and potentially reach its 700 million active users.

But many developers have found that making a popular app on a messaging platform is more difficult than creating one for the Google Play Store or iOS App Store. Discoverability is much more difficult, and largely relies on personal recommendations. At the same time, those personal recommendations result in better download rates and user retention.

How can Facebook take advantage of Messenger Platform's strengths while covering its weaknesses?

Early use cases aren't ground-breaking
The first set of apps built on top of the Messenger Platform aren't particularly groundbreaking. Most are just apps that allow users to share photos and videos. The more innovative ones enable users to create their own videos or images. So far, none have emerged as the next Snapchat. One theory behind the launch of Messenger Platform is that it will allow Facebook to co-opt the next Snapchat by dangling a large audience in front of developers.

But it seems developers are just as good foregoing Messenger Platform in favor of a stand-alone app or an app developed on top of Facebook proper like Candy Crush or Farmville back in the day. The problem is that popularity spreads much more slowly on a messaging app compared to other social networks. Instead of communicating in a one-to-many format like on Facebook proper, Messenger apps are shared on a one-to-one basis.

That more personal sharing leads to higher download rates, however. The Wall Street Journal reports that users are 3 times more likely to try an app recommended over Messenger. What's more, they're 17% more likely to keep using an app after downloading it compared to other platforms.

Facebook admittedly needs to improve discoverability on the platform in order to attract more innovative developers. But truly interesting apps will likely succeed with or without the built-in audience and messaging platform provided by Messenger.

Who's Facebook's target audience?
So, if the best apps are just as likely to succeed while foregoing the Messenger Platform, who can really benefit from the messaging service? Businesses.

Businesses are constantly trying to get customers to download their apps, and Messenger Platform provides an opportunity for businesses to integrate their products with an app people are already using every day. Uber was the first business to integrate its app with Messenger, allowing users to request a ride within a conversation.

Businesses on Messenger was launched at the same time as Messenger Platform, and Mark Zuckerberg continually points to it as the key to monetizing Messenger, not the app platform. But the app platform may be key for businesses to get the most of Businesses on Messenger.

That's why Facebook is reportedly releasing a software development kit for developers to create "bots" for Messenger. The bots will enable Messenger to access a website's API to add functionality to business interactions on Messenger similar to how Uber's integration with Messenger works. For example, Everlane -- one of the launch partners for Businesses on Messenger -- could expand on its Messenger presence by enabling customers and representatives to share items from its app on Messenger, help customers decide which items to buy, and make the purchase directly from Messenger.

Facebook is already encouraging businesses to interact with potential customers on Messenger through revamped Pages on its main platform. It's also rolling out new ad formats that allow businesses to start conversations with users on Messenger. Those interactions could be the launching pad for businesses to get users to download their apps. As noted, app recommendations on Messenger have a much higher take rate. What's more, the messaging service adds another layer of functionality to their apps.

Businesses are the market Facebook needs to be targeting with Messenger Platform by highlighting its strengths of high download rates when an app is suggested. While discoverability remains an issue, established businesses are much more willing to spend money to be discovered than a start-up looking to leverage Facebook Messenger's audience for accelerated growth. Such efforts could help Facebook finally make some money from Messenger.

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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