Yesterday, Facebook (FB) announced that David Marcus, who had been a President at PayPal, would be joining the world's largest social network to lead the company's efforts in messaging. Not only is this a hint that the company is serious about monetizing its Messenger app, but it's a huge blow to PayPal, and could be a hint at what Facebook plans to do with messaging in the future.
Messaging is one of Facebook's most important services. It is crucial to the Menlo Park, Calif.-based company's future, as it seeks to capitalize on its 1.23 billion monthly active users (MAUs) and generate additional revenue streams outside of advertising and to a lesser extent payments from gaming.
Marcus, who had been responsible for leading PayPal's mobile payments business, is a potentially game-changing hire for Facebook, as he can take the 200 million (and growing) people who use Facebook Messenger and other messaging products (the $19 billion WhatsApp acquisition comes to mind, as does Instagram), and begin to turn those into real businesses, and not just extensions of Facebook's ecosystem. "Under David’s leadership, PayPal has delivered great new product experiences for customers and businesses, driven new innovations in mobile commerce and achieved impressive growth," Facebook said in the press release announcing the hire.
As people increasingly turn to messaging platforms, such as Snapchat, Line, Kik, Messenger and other services for more than just sending a text or a photo, there will be enormous opportunities to generate revenue and show impressive user growth stats, making it clear these platforms are here to say.
In April, Facebook noted Messenger had more than 200 million users, while WhatsApp is on its way to surpassing 600 million users around the world, and Snapchat is getting ready to top 30 million users, with 400 million "snaps" sent every day.
WhatsApp has already proven that it can generate revenue from its users, charging 99 cents a year for the service, though a good percentage do not currently pay for the service. Given that Facebook's payments and other revenue in the first-quarter was $237 million, this segment pales in comparison to the advertising business, which generated $2.27 billion for Facebook in the first-quarter, up 82% year over year.
Marcus was particularly excited about the future of Messaging Products at Facebook, noting it's just getting started. "I’m excited to go to Facebook to lead Messaging Products," Marcus said in a Facebook post discussing the move. "And I’m looking forward to getting my hands dirty again attempting to build something new and meaningful at scale."
Being able to conduct commerce (buying goods and services) inside a messaging app may wind up being an enormous opportunity for Facebook, given its size and scope, and how explosive the growth has been for messaging apps. Some companies, such as Kik, have been experimenting with buying stickers or in-app purchases through messaging, so the possibilities for Facebook are endless to generate enormous amounts of revenue from its many, many Messaging products, all the while generating billions and billions in revenue from advertising.