Threads, Instagram and Monetizing Conversations
Some thoughts on why Threads exists and the business oportunity it presents for Meta
A thought I’ve been ruminating on is that Threads is ultimately an app to monetize high usage Instagram use cases that have yet to be tapped and make Instagram simpler to use.
Conversation vs Status
In August 2022, I wrote a blog post discussing one of the key issues that Instagram faces - that it’s basically two products in one (a private messaging app and a public social media app) and those apps each have use cases that are in conflict with one another.
In this Casey Newton interview with Instagram head Adam Mosseri from 2022, Mosseri shared some interesting insights on the evolving nature of engagement on Instagram:
Adam: What's happened over the last decade is that how people share with friends has changed. It has shifted to stories, and it has shifted to DMs and to group chats. More photos and videos are shared in DMs in a day, then are shared into stories. And more photos and videos are shared into stories in a day than are shared to feed.
The common response to this answer is that users post where they get more engagement, hence less feed engagement means more stories engagement. But why is sharing to DMs outpacing sharing to stories?
My 3 assumptions:
Instagram supports a number of use cases from private sharing in DMs to public posting in the feed, and the user outcomes for each use case are different (and maybe in conflict).
Private sharing is growing for a variety of reasons. Some of which are a response to the public nature of the feed.
Video is a particularly good format for content shared in DMs because of how information dense and entertaining video happens to be compared to photos.
Key Takeaways:
Instagram is essentially two product experiences in one: private messaging (conversation) and public social media (status-driven entertainment). This is the crux of the current tension for its product team and its users.
Instagram is still the leader for millennials for those two experiences
By in conflict, I mean a growing share of IG usage is happening away from the status-driven feed in an unmonetizable feature (DMs). From a user behavior perspective, this is a completely logical shift. The feed is both status-driven, so you won’t likely see your friends content and the content that is there is completely monetized with ad placements. For users seeking connection, the hierarchy that would naturally follow is DMs > Stories > Reels > Feed.
From a business perspective, this isn’t good for ad revenue long term if the trend continues. There’s a delicate balance in surfacing enough relevant and engaging content to go along with ads being shown. As engagement shifts to the DMs, that will ultimately have an impact on ad revenue from the feed.
As an aside, this is why it’s so important in the medium term for the IG cross-functional teams to continue to grow Reels views/shares and for Reels to move from revenue neutral into revenue positive. Reels serve as both status-driven entertainment and conversational content when shared in DMs and that will be key for IG going forward. “Reels has now driven more than 40% increase in time spent on Instagram since launch,” Meta CEO Mark Zuckerberg share during Q3 2023 earnings call.
So Why Launch Threads?
As Meta Product Lead Dare Obasanjo shared on Threads, Meta has previously made multiple to spin out key features that were previously unmonetized into a potentially monetizable product:
Giving the level of engagement in private sharing in DMs has increased significantly over the years, the IG product team made two prior attempts at IG DMs as a standalone product, including the first iteration of Threads! The current iteration of Threads is similar to DMs in that it is focused on facilitating conversations, but it is also public by default via a feed. Being a public feed lends itself to better monetization opportunities like ads and subscriptions than a traditional direct messaging product. But that’s only one part of the strategy IMO.
Another under-discussed aspect of IG is how active the comments section is under posts to the feed (especially for big accounts). Threads lends itself well to that use case. Mosseri said an interview with Casey Newton after Threads launched that the IG comments section activity was an insight that eventually lead to Threads. This confirmed something I tweeted the day Threads launched:
Even though I mentioned Twitter in the tweet above, Threads’ ambitions are much higher for three reasons:
Twitter was never able to provide a platform for healthy conversations that most normal internet users would want to engage in. A lot of Twitter could be best described as a weird, toxic group chat. Threads is heavy on moderation and conversational health from the get go.
Twitter allowed anonymous and pseudonymous accounts to flourish on its platform to its initial benefit and in my opinion, to its eventual detriment. Meta has a bias towards real identity across its family of apps and I think will limit some of the harassment and anti-social behavior found on Twitter (pre and post-Elon).
Twitter’s lack of scale was in due in part to the two reasons above, which limited its business potential to the Street and its ability to invest in its core services. Meta has scale well beyond Twitter and world class execution. Plus an appealing growth story if they can make a new Twitter work, when the old Twitter couldn’t.
Ultimately, the goals of Threads are to
support a high demand conversational use cases (ie. IG post comments) with a more prominent UX and
create viable monetization opportunities for this conversational use case.
by separating this use case into its own app. Emphasizing and improving the functionality for the IG post comments use case in Threads will simplify the IG UX (and value proposition) and hopefully bring a boost to ad revenue from both IG and Threads.