Earlier last week Facebook’s CEO announced major changes to how it wants to operate – likely in an attempt to distance itself from recent data breaches – away from public content to a ‘privacy focused vision’. It also announced a move to bring its platforms closer together; WhatsApp, Instagram, Messenger and MSQRD to have more of a ‘one stop shop’ something many believe see Facebook look to replicate WeChat in China.
Replicating WeChat’s approach goes further – in China, WeChat is used by some 1 billion users monthly and is a one-stop shop with end-to-end encryption. It consists of a gaming platform, a bank, chat functionality, food delivery and more. 70% of WeChat revenue is driven by value-added services such as VIP status, stickers, fees on money transfers and purchases – comparing this to Facebook where currently 80% of revenue comes from ads. Two very different revenue models.
With Facebook looking to shed its privacy and data issues, move to full end-to-end encryption and amalgamate features adopting the approach of WeChat to weave itself into our day to day lives as well as encapsulate services we all use daily – could this be a major step change in how Facebook does business?
No timelines were given in the announcement of ‘change is coming’ but with Facebook struggling to attract the younger demographic and dropping a million EU users in Q4 2018, it needs to make some changes.
What does this mean for advertisers?
At the moment it’s too early to tell. Currently, Facebook delivers a plethora of targeting methods aligned to data that it holds and stores on its users. This includes who we are as well as what we like. It is this data that has seen it rise to dominance and see, for some advertisers, it become their leading channel for their media plans.
If ads became less prominent, arguably the auction ‘heats up’ and advertisers are forced to pay more for the same audience simply because these users are being exposed to fewer ads.
But the ‘value add’ aspect becomes an interesting one, companies integrate their services directly with WeChat to offer services – if you could order your Uber directly through Facebook, then would Uber need to pay for advertising, or simply allow Facebook to take a small fee on each ride booked?
The approach moves to tie companies directly into the platform – making the platform harder to break away from for both companies and end users, as it will facilitate all of your day-to-day, making the shift from an advertising-heavy platform, to a service one. Ultimately, a service one that then has even more transnational and behavioural data than it currently does.
