Skip to main content

As Facebook Inc. (FB) - Get Meta Platforms Inc. Class A Report maxes out on the number of ads it can serve on its main platform's News Feed, the giant social network is increasingly looking to its other big platforms for growth. 

The tech giant's net digital ad revenue in 2017 is expected to climb 35% year-over-year to $36.29 billion, according to internet research firm eMarketer. That puts Facebook in second place for mobile ad revenue share, behind only Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report Google, which claims 33% market share compared to Facebook's 16.2% share. eMarketer expects Facebook's mobile ad revenue to climb a robust 42.1% in 2017 to $31.94 billion. 

TheStreet will be hosting a live blog analyzing Facebook's earnings report after the close on Wednesday. Please check our home page for more details.

But while Facebook is holding its own in the competition for ad share, the company has repeatedly warned investors since late 2016 that it expects ad revenue growth to slow in the second half of 2017 due to maxing out on of the ad load on its main platform.

In order to not overwhelm users with ads on the Facebook platform, the company will have to turn to other products for ad revenue. CFO David Wehner said in the first quarter earnings call that ad loads would "play a less significant factor in driving revenue growth after mid-2017."

TheStreet highlights three apps that Facebook hopes can become the next Facebook News Feed in terms of potential ad space and revenues. 

Image placeholder title

1. Instagram

Facebook bought photo-sharing app Instagram in 2012 for $1 billion. The app hit 700 million users in April, helped by Facebook copying certain features from another popular photo-sharing app Snapchat, whose parent company is Snap Inc. (SNAP) - Get Snap, Inc. Class A Report .

Facebook launched Instagram Stories in August 2016, about three years after Snapchat first launched the feature on its own app as a way to let users post a series of photos or videos that will stay up for 24 hours before disappearing. As of June, Instagram Stories had 250 million daily users, while Snapchat reported 166 million daily users in May.

Instagram Stories represents a huge ad revenue opportunity for the company. In late June, Facebook's global head of sales Carolyn Everson told CNBC that a third of the most-viewed stories on Instagram are produced by businesses and one million are from advertisers. "We think Stories is also another format that not only consumers but advertisers use," she said. "You are going to see Stories in a lot of different platforms." A few weeks later, CEO of advertising company WPP Martin Sorrell told CNBC that attendees at the app developers' conference on the West Coast all said that Facebook was successfully copying Snap.

More of What's Trending on TheStreet:

Watch More with TheStreet:

  • Sorry Zuckerberg, Elon Musk Still Thinks Artificial Intelligence Is a Huge Problem
  • Gold Will Make a Comeback; Dollar Rally is Over - Peter Schiff
  • Just How 'Unlimited' is Your Unlimited Data Plan?
  • How Birchbox Took on Macy's, J.C. Penney and the $500 Billion Beauty Counter
Scroll to Continue

TheStreet Recommends

Facebook is a holding in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells FB? Learn more now.

Image placeholder title

2. WhatsApp

Facebook bought standalone messaging app WhatsApp in 2014 for $19 billion. The app has 1.2 billion global users and currently employs 200 people.

Although WhatsApp has promised to avoid advertisements, Facebook is still working on how to make money off of the app, according to a number of job postings that were first highlighted by Recode last week. A job description for "product manager" at WhatsApp said the company was looking for someone to "lead product development on our monetization efforts."

In addition, WhatsApp is looking for a product marketing manager to help with the "go-to-market plans," as well as a business communications position to be the middle person between WhatsApp and the press.

The app is especially interested in reaching emerging markets, a source told Recode. The claim was backed up by the three job postings, which request experience in international or emerging markets.

In February, WhatsApp hired former Facebook executive Matt Idema as its first COO. A spokesperson said that his role would focus on how to monetize the app while still remaining ad-free. One method that has been floated around is using WhatsApp as a place for companies to introduce their own branded chatbots, similar to the ones being introduced on Facebook Messenger.

"Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from," WhatsApp CEO Jan Koum said last year. "That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight."

Image placeholder title

3. Messenger

Facebook's Messenger app first came out in July 2014 and allows Facebook users to chat with each other and send pictures and videos. 

The company started testing selling ads that were placed on Messenger's home screen in January. Facebook product manager Eddie Zhang wrote in a blog post that users won't see ads within their Messenger conversations unless they click on the ad, which will start a conversation with the brand behind the ad. Businesses can't start chatting with a user unless the user clicks on the ad. 

"Businesses have long been telling us that they are very excited about the potential of the Messenger platform to reach their customers and help them to drive sales, build brand awareness and increase customer satisfaction," Zhang wrote.

This past November, Facebook had started letting companies promote their Messenger chatbots on News Feeds with ads. Companies can use these traditional News Feed ads to lure users int a conversation and introduce them to promotions. 

At Facebook's annual developer's conference in April, it announced a new Discover section in Messenger to display "amazing experiences" that includes companies a user might be interested in. Right now, Facebook is simply trying to change customer's behavior, getting them to interact with Messenger more. Facebook needs to "get a lot of businesses using it organically and build the behavior for people that they reach out to businesses for different things," CEO Mark Zuckerberg said on the last earnings call.