What made Facebook Acquire wit.ai and venture into chatbot territory

FB User Landscape:

Let’s look at some interesting Facebook Usage Statistics to put things into perspective.

• As of 2020, Facebook is the largest social media platform globally with 2.6 billion monthly active users worldwide.
• 79% of Americans use Facebook — the platform with the second closest usage percentage is Instagram, at 32%
• More than half (53%) of U.S. residents use Facebook “several times a day.”
• 50 million+ businesses use Facebook Pages.
• 22% of the world’s total population uses Facebook.

Potential Challenge to Facebook’s growth

Facebook already has around 2.2 billion monthly active users and it’s really hard to keep growing the user base forever. It’s like a double-edged sword, on one hand, the FB team wants to maintain its new user acquisition but on the other hand, it’s also important to engage the existing customer base so that they spend more time on the platform. It’s the law of large numbers.

Facebook must work to keep its users engaged. Wondering why this is important to Facebook?

Do you know what’s the majority revenue source for Facebook? Yes, you’re right.

Facebook’s majority revenue comes from the advertising business unit.

For instance, when Facebook made some changes to its news feeds a few years back, it resulted in a 5% drop in time spent on Facebook. Less time spent on Facebook equates to fewer opportunities for Facebook to show users ads.

Objective: Strengthen User Engagement

With the above achievements in the kitty, it’s obvious that the management is spending more and more time brainstorming to find ways to engage this user base and leverage it to build a large business around this ecosystem.

Many companies, including Facebook, have billions of users using the platform, trying to figure out ways to grab the consumer’s attention.

Since Facebook owns more “mobile moments” — time spent and data spent on mobile devices — than anyone else, this is too big an opportunity for the company in terms of advertising revenue.

The idea is to increase the time spent on the app and understand the users’ behavior so that FB can target ads easily.

Acquiring Rationale:

Acquiring wit.ai is just another step in the overall user engagement strategy for Facebook.

Its evident Bots have many use cases. Bots let users interact with them as though they are conversing with another person, and interactions can happen across channels like SMS, WhatsApp, social media DMs, Viber, telegram, etc.

All the global companies have opened up their platforms to developers to grow and nurture the bot ecosystem. The likes of Facebook, Alphabet’s Google, Amazon, and Microsoft, have invested heavily in enabling developers to build apps using open source tools.

For example:

• Facebook acquired Wit.ai Bot Engine & made it available to developers.
• Microsoft CEO- Satya Nadela Launched Microsoft Bot Framework, a platform for developers to create bots that interact with humans from text to Skype, Slack, Office 365 mail, and other services.
• Amazon has invested in the Alexa platform, the technology behind the Amazon Echo devices
• Google acquiring Api.ai
• Slack also launched its own platform too

With this, the company aims to engage the millennial target audience hooked to messaging apps, including FB messenger. The company believes bots can streamline the communication challenges between brands and end-users. This has the potential to increase spending time.

Higher time spent means higher engagement and this correlates with higher advertising effectiveness. This leads to an overall increase in the supply of impressions that Facebook can sell. Hence, revenue grows.

This is another great advantage for Facebook. It enables the Facebook team to learn more about its users. They can discover the habits and interests of the users and use them to target ads. The result is a powerful network effect that competitors cannot match.

So far Facebook is doing extremely well when it comes to the time spent by a user on its platforms and has very rivals. According to the latest data from ComScore, the only one that comes close is Alphabet’s YouTube, where users spent an average of 17 minutes a day on the site. That’s less than half the 35 minutes a day users spent on Facebook, based on comScore’s data (which, unlike Facebook’s 50 minutes, is derived only from users in the United States).

In this time of the pandemic, the Facebook messenger chatbot has found its use to battle covid 19 as well.

In an effort to better inform the world about CODIV-19, the WHO has launched a Facebook Messenger version of its WHO Health Alert platform — offering instant and accurate information about COVID-19– via Facebook’s global reach.

It’s going to be very interesting to see how the bot landscape evolves.

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