WhatsApp introduces ads in its app

I’d love to know the expected ad revenue per user for makers of apps like WhatsApp, Instagram.

I’m pretty convinced I’d pay 10x or more than that amount for a completely ad free version but I can’t be sure.

You would not, because 90% of the years wouldn't pay and you wouldn't also to have nobody to talk to after everybody moves to the next chat app

I'm not sure if the number was for Facebook specifically or all Meta apps, but they did quote a number of around $70 revenue per year per US user a while ago. (with (much) lower numbers in other parts of the world)

Why would users who can continue to receive exactly the same experience as today leave because some other users can opt to pay to go ad-free?

That’s interesting, thanks

Don’t underestimate how expensive ads are and thus how much money they can bring in. Marco Arment, the developer of Overcast podcast player, has made remarks in the past about how the ad-supported version is completely viable and may actually make him more money per user than the price of his paid option. In his case, he runs his own contextual ad system. Obviously Meta is in a completely different league in terms of sophistication, meaning they are probably able to sell more targeted ads which means more money, and they also have the luxury of not having to pay any middlemen since they own their own ad infrastructure as well.

Part of me thinks the reason why they don’t offer that paid ad-free version of Facebook (which they built to try and appease the EU regulators) in the US is because their ARPU is so high that people would laugh at the price “Facebook/IG Premium” would have to cost.

Also, don’t forget that at least for now, paid subscriptions to social media apps would need to pay a 30% rent to the platform owner duopoly. This means that the price it would be it would cost would need to be 42% above than its ad ARPU just to break even.

These numbers are actually kinda interesting, in that they're based on user location, not advertiser. So basically all global companies target the US first because it's a big market with consistent regulations and mostly one language (compare to the EU where you'd need English/German/French/Spanish/Polish and still would miss a lot).

So, those numbers reflect a capital inflow to the US market rather than (as many people think) absurdly high conversion US users.

Meta stopped reporting user numbers/CPMs by geography after the market freaked out when user growth plateaued in the US (because they'd acquired basically everyone).

> So, those numbers reflect a capital inflow to the US market rather than (as many people think) absurdly high conversion US users.

But the capital inflow is also because there is a lot of consumer spending in the US to convert.

If Instragram had a reasonable paid tier, like $5 a month, I'd do that in a hearbeat. I'd also use instragram 1000x more. Because it's ads only in north america, I use it the minimum I need to for networking purposes.

> Part of me thinks the reason why they don’t offer that paid ad-free version of Facebook (which they built to try and appease the EU regulators) in the US is because their ARPU is so high that people would laugh at the price “Facebook/IG Premium” would have to cost.

The ad-free one doesn’t have to cost more than the ad-supported ARPU. There’s a pretty reasonable argument to be made that social media services with near-ubiquitous uptake should be regulated as utilities, and regulators could reasonably place the price at cost + a marginal profit margin as determined to be reasonable, like they do for other utilities that are privately-owned.

> Also, don’t forget that at least for now, paid subscriptions to social media apps would need to pay a 30% rent to the platform owner duopoly.

They don’t have to offer paid subscriptions via IAP.

Sort of. It's more because of how ML models work. If you have an audience of 100mn then it's much easier to get enough conversions to optimize the models. It's much harder to do it with an audience of 3mn.

By that logic Indonesia and Bangladesh would have higher ad-spend per head than France, because they are larger markets and it doesn't matter how much money people have to spend?

It's clearly both. But if I have a 1/100000 outcome, I can get maybe 500 conversions in France or the UK, but 3000 in the US. That makes a really large difference in terms of how many times your ad is shown to likely users.

But yeah, ML models do in fact work better in Indonesia and Bangladesh, but as you noted they have less money to spend.

The flip side of this is to consider why those ads are so valuable. If advertisers are consistently getting paid that much, it's because the ads are successful in extracting at least that much extra profit from the users. Which presumably comes from all the superfluous purchases they make.

> doesn’t have to cost more than the ad-supported ARPU

I'll state up front that I'm not much of a socialist, so I realize opinions will vary, but it seems crazy to regulate something so frivolous as a social media site to the point of setting its prices. If people don't like Facebook, their ads, or their pricing, simply not using it is not a life-crippling suggestion the way "don't use the Internet" is.

So I'd support you on regulating broadband ISPs waaaaay before setting the prices X or FB can charge for meme-related services.

I'm not much of a socialist either, and I wish that social media was frivolous enough that I didn't see their regulation as a reasonable proposition.

The problem isn't access to memes, it's that for various categories of services/interactions, Meta (and presumably WeChat and/or others in other locales) properties effectively are the internet. I've seen all of the following use social media services as their sole method of communication or online presence: amateur sports teams/leagues, gyms, local governments, government agencies, parent/school groups, local service providers (barbers, farmers' markets, restaurants, etc.), online classifieds, community food boxes.

The fact that Meta has intermingled its meme factory with its hosting of the informational/communication platforms for a wide array of local groups/organizations/businesses is something they chose to do, and I'm not willing to accept the excuse of "we make a lot of money from our ad-serving brainrot algorithms so we couldn't possibly charge less than that amount of money for access to the non-algorithmic features on which we've gotten people hooked."

> [...] hosting of the informational/communication platforms for a wide array of local groups/organizations/businesses is something they chose to do,

I would argue that it's those people (citizens/companies/orgs) who did the important choosing here, not Meta. It's more cheap and accessible than ever to make a website that isn't dependent on social media, and there are tons of alternatives for connecting groups.

The elephant in the room, I think, is that most people actually feel that Whatsapp, Facebook Groups, etc. have no important downsides. I can't prove it, but I suspect that more than half the people who are involved in such network-effect communication (let's say, all the categories you described, the non-1:1 communication that takes place hosted on Meta platforms) find it to be very convenient, not least because they're already on those platforms by choice for recreation.

THAT is why it's so hard for the minority who philosophically hate ideas like targeted ads are unable to convince the masses to all move to Mastodon, or to one of the hundreds of lesser-known platforms that don't have all the same baggage (in their eyes). It isn't for lack of options. It's because at least a plurality of people are fine with it.

So the argument to effectively nationalize Meta, simply as punishment for getting normies to like their apps so much, because a minority of people just think it's wrong to be good at targeting ads, seems extreme to me.

> So the argument to effectively nationalize Meta, simply as punishment for getting normies to like their apps so much, because a minority of people just think it's wrong to be good at targeting ads, seems extreme to me.

I don’t find this to be a good representation of my argument - what I’d call for is very much not punishment, it’s a targeted response to fix no more than the identified problem. (The problem being, people aren’t being afforded a reasonable option to function in society that doesn’t involve a large wealth transfer to facebook.)

I don’t think “effectively nationalize Meta” is a fair reading of my position either - there are plenty of autonomous private companies are non-nationalized and that operate in areas where there’s regulation around pricing.

> a reasonable option to function in society that doesn’t involve a large wealth transfer to facebook

There are so many people out there functioning in society just fine without Facebook. And Facebook tried to have an ad-free Facebook product for EU where people could just pay money for the services they apparently depend on -- a perfectly fair transaction, and the EU fined them for that, now mandating that Facebook has to offer a product to EU users for €0 but is only allowed to monetize it with ads that no advertiser would buy because untargeted ads are a waste of money. See the banner ads of the late 90s. Or I suppose the EU regulators would also be satisfied if FB just provided the services to Europeans as a charity.

I don't have a personal dog in the race, and don't own any shares of Meta, but I think the regulators don't know what they're doing, and as such, would prefer that they don't go too far in the area of social media, advertising and tracking until they figure it out.