Meta's Revenue Surge: Unveiling the Drivers Behind Click-to-Message Ad Success

Meta's (formerly Facebook) revenue from click-to-message ads in India has experienced substantial growth during the September quarter, doubling according to CEO Mark Zuckerberg's earnings call remarks. The surge in revenue spans across various platforms, including Facebook, Instagram, and WhatsApp. Zuckerberg highlighted that over 60% of WhatsApp users in India engage with business app accounts through messaging each week.

WhatsApp alone boasts a user base of over 500 million in India, indicating the strong potential for commerce over messaging platforms. Marketers have recognized the preferences of Indian consumers, who tend to prefer chat-based interactions with businesses over phone calls. A Kantar research study commissioned by Meta revealed that 86% of Indian adults engage with businesses through messaging at least once a week, significantly surpassing the global average of 66%.

Consumer expectations are evolving, with the younger generation seeking instant, round-the-clock communication. WhatsApp, along with other messaging platforms, is making efforts to cater to this demand through features such as payments, AI/ML-enabled interactive messaging, and product catalogs. By facilitating such interactions, these platforms offer convenience to consumers while contributing to Meta's revenue growth.

In addition to providing a valuable channel for businesses to engage with customers, Meta's competitive cost-per-thousand-impression (CPM) rates continue to draw advertisers. Experts suggest that the rise in demand for messaging applications, combined with the large user base across Meta's platforms, has made their ad pricing competitive in India.

However, cost-per-click (CPC) rates for Instagram ads in India hover around $0.80, aligning with industry standards. This cost can vary depending on factors like ad format, targeting parameters, and competition within specific industries.

Meta's AI and machine learning capabilities are expected to play a crucial role in determining ad costs. While alternatives exist, Meta's dominance in social media and messaging apps is expected to persist. Meta's extensive supply pool and AI/ML-powered micro-targeting segments make advertising remarkably effective on its platforms, leading to competitive CPMs that are around 50% cheaper than other managed platforms.