How ‘Bots’ Can Drive Revenues For Facebook’s Messenger?

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Downloading an app for every business a consumer wants to deal with can become a thing of the past, if Facebook (NASDAQ:FB) succeeds in its new plan.  The company is testing ‘chatbots’ or ‘bots’ for short on its messenger app, which are software agents engage users  interact with business sites to get answers to their queries or execute certain transactions. Users can chat with businesses via bots using Facebook’s messenger in a similar way as they chat with friends. However, bots would provide limited responses based on the consumer requirements. Currently Burger King, 1-800-Flowers.com and KLM airlines have partnered with Facebook to use bots.  Now Facebook will work to replace individual business apps with its Messenger app.  We believe that, if this ‘bots’ experiment is successful, there could be a boost to Facebook’s revenues from Messenger going forward.

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Customer Support Via Messaging Can Be a $ 4 billion Revenue Opportunity

Facebook’s chat applications have seen a huge surge in users in the past few years. While Whatsapp has crossed 1 billion users, the Messenger app has nearly 900 million monthly active users.  Both these applications together process 60 billion messages a day, which is three times the global volume of text messages.  Facebook’s huge user base and active engagement for its chat applications makes the company an ideal candidate to attract businesses to use its Messenger app for business communications, including normal business transactions and customer service.  According to Evercore Group LLC, if Facebook is able to capture half the predicted business for customer support via messaging, it would represent a $ 4 billion revenue opportunity for the company.  While advertising on its platform is main source of revenue for Facebook, success of ‘bots’ on messenger can open up a new revenue stream for Facebook.

As an increasing number of businesses establish a digital presence, consumers could suffer from an ‘app overload’ and downloading a separate app for each business might not be feasible in future. Facebook’s attempt to make Messenger the go to app for all business interactions of consumers, if implemented effectively, has a huge growth potential. The success of this experiment will depend on the company’s ability to attract businesses to use ‘bots’ by providing a simple interface and data and analytics based on customer interactions.  Initial reactions to the pre-programmed interactions using ‘bots’ so far are mixed, with users facing several issues. That said,  Facebook’s ability to make quick changes based on the feedback will be critical to retaining early adopters of the technology.  If the company is able to provide artificial intelligence and advanced features making bots the preferred channel of communication, it could open a huge revenue opportunity. However, if bots remain yet one other channel of communication alongside the existing apps, their potential will be limited, in all likelihood.

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