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How Facebook’s Messages System Helps It Win

Unlike Gmail and other free email providers, Facebook is not going to serve up ads against the content of your messages. Here’s how it’ll make money anyway.

How Facebook’s Messages System Helps It Win
Facebook Messages

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Facebook said that it’s not going to serve up ads against the content of the messages you exchange in the new, turbo-charged messaging system it unveiled today. Google, of course, does that very thing–it reads your emails and places short text-based ads above them about things the system thinks you might be interested in, based on what you’re writing about. Which begs the question: How does Facebook make money on the new feature, if it’s not going to turn your messages into money?

Firstly, Facebook doesn’t feel the need to have a revenue plan associated with each new feature it rolls out. Facebook Places, launched back in August, didn’t offer any new revenue source. Nor did Groups in October, Deals earlier this month. Facebook can do this because it doesn’t have immediate pressures to generate revenue. It’s enormously well-funded (to the tune of $836 million, according to CrunchBase). That gives the company plenty of leeway to focus on features and services that users and advertisers love, and build toward its IPO.

Facebook’s ultimate goal is to pull you into its universe. The company makes money by serving up ads against the things that you self-identify with—the pages you “Like” or specific information you input into your profile. Unlike Google AdWords, where advertisers buy keywords, and unlike traditional display ad networks, Facebook is a place where advertisers are buying specific attributes about you. Women in Idaho aged 35 to 50, for example. People who “Liked” Bill O’Reilly’s page. People who list the band Green Day under their Interests.

This means Facebook doesn’t need to read the content of the messages to guess what you might be interested in. They know what you’re interested in from what you’ve actually declared. But it also means that Facebook, like all media properties relying on advertising for income, needs an enormous (and enormously active) user base in order to make its nut. A messaging system that increasingly allows people to communicate quickly and easily, in the ways they prefer, is likely to grow that user base ever larger.

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About the author

E.B. Boyd (@ebboyd) has holed up in conference rooms with pioneers in Silicon Valley and hunkered down in bunkers with soldiers in Afghanistan

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