The Messenger Effect

The next big thing in social media may not be a Facebook competitor, like Snapchat, or a high-profile Facebook acquisition, like WhatsApp. Instead, given Zuckerberg’s strategic focus and investments, there’s a good chance that Messenger could dethrone Facebook. Messenger has almost entirely been a Facebook experience so far. It is now transforming into a consolidated commerce platform as well as the global go-to communication platform.

On the commerce side, Messenger now natively processes payments. This is a huge step that allows for a seamless transition from intent to transaction, all within the same platform. On the communication side, Messenger is gaining ground in both peer-to-peer and B2C markets. Messenger allows users to send GIFs, transfer money, edit photos, and conduct audio/video conference calls, while offering a directory of Facebook’s ~2 billion users. But that’s not all – Messenger is opening up to third-party content that will keep users engaged and also help developers find an interested audience – something web Canvas did so well on desktop.

FB's network of active business pages is growing. These businesses are using FB to connect with a target audience. That is the first-leg of the B2C relationship. The second-leg of the B2C relationship is turning that connection into a transaction, and this is where Messenger naturally comes into play. The obstacle for other messaging platforms, such as traditional SMS, is they do not support an already established first leg of the B2C relationship. Messenger is on a path to replace phone based customer service and apps. Bots for Messenger will allow businesses to deliver automated interactive experiences, e-commerce guidance and customer support with the help of chat-bots. Bots have the potential to increase user engagement and satisfaction for a brand.

While the future looks very promising, it’s not without a set of watch-outs. Messenger’s worry, ultimately, has to be that it’s almost impossible to win over young consumers who have grown up using chat apps. That issue aside, Messenger needs to evolve much further and in more fields to become dominant in the future. On a strategic level, it could invest in the following areas:

(1)  Extend its use case beyond private communication in order to capture business relationships. If people get used to using Messenger in a professional context, interacting with brands, carrying out e-commerce transactions and directing digital assistant applications won’t be that unusual anymore.

(2)  Improve user engagement by developing a creativity ecosystem. It should let users create their own messaging experience by letting them be creative and do things they couldn’t do before.

(3)  Target the masses with valuable services offered through the conversational interface. It should make bots discoverable and more present in the online and offline world.

In summary, Messenger is well positioned to become the holistic platform that hosts all different kinds of services in the future. Messenger already has a strong position with its vast user base across the world but needs to keep innovating in order to continuously engage and delight this user base in new ways.

Medium: Opportunities and Challenges

Medium aspires to be the best place to read and write articles. While I’m optimistic about the future of Medium given how great the product is, there are some critical factors that Evan Williams and the company needs to watch out for.

The online publishing space is fairly fragmented and all the publishers are engaged in a zero sum game: user’s attention. The space comprises of paid content providers (newspapers, journals, magazines, etc.), celebrity writers (politicians, sportsmen, actors, etc.), professional publishers, independent bloggers / opinion providers and others. Medium's simple and standard design along with an  unbiased ranking algorithm is a strong competitive advantage. On the flip side, a small user base (~25 Million; small relative to other social networks) along with a significant reliance on other social media sites for traffic is a watch-out for the company. To achieve its vision, Medium must find a way to increase its share of direct traffic.

An important aspect of growth for Medium is diversity of publishers so that it appeals to more users globally. Currently, most of the opinions and posts come from tech and media elite. There is a huge opportunity to partner with and empower professional publishers through Medium. As Evan and his leadership team thinks about growing globally, it’ll be really important to get adoption from writers across the globe from different countries, languages, etc.  Also, to ensure reader engagement in the long term, Medium needs to find a way to scale up while maintaining quality standards.

Finally and perhaps most importantly, getting the monetization strategy right for the company and publishers is going to be the key for Medium. As they bring more professional publishers onboard, they’ll need to show value to the advertisers quicker, to keep the professional publishers engaged.

Recommendations: Medium has gathered some momentum since inception (25 million + visitors and some paid content) to begin the transition towards being a platform.

In the short term, Medium can continue with its current model with free access to the non-paid content. As an add-on feature, Medium can partner with some paid content providers and create a sling box like service by bundling paid content. This will create additional value for the readers – access to more paid content without having to pay for each service individually, and more value for publishers – more readers; thereby expanding the pie for both parties. A sling box like service serves as an experiment (low risk) with minimal disruption to the loyalists but attracting new users from the lone-standing paid content providers.

In the long term, once Medium has a significant reader population (thereby higher negotiation power with paid content providers), they can add a Spotify like service i.e. aggregate all paid content and monetize using a monthly subscription model.