Can Zoom Make A Success of its New Ad Offering?

09 December, 2021 

Zoom was undoubtedly one of the biggest winners of the pandemic. The video conferencing service saw its revenue increase from $188 million in early 2020 to over $1 billion by July 2021. Zoom operates on a “freemium” model; offering a basic, limited model for free with anything above that costing a monthly subscription. 

Zoom has largely made its money from subscriptions – and by and large this has worked given the number of businesses, educational institutions and other organisations which have purchased a Zoom subscription to avail of the enhanced features.

But now Zoom is looking at how to monetise its growing free user base, with ads emerging as one option.

For individual users, the ‘Basic’ free offering is still pretty generous. The free tier offers meetings of up to 40 minutes for up to 100 participants, and one-to-one meetings for up to 30 hours. If you’re just using Zoom to catch up with friends and family, then the free tier offers a pretty good deal. 

“As the pandemic took hold in 2020, we experienced exponential growth, and our user base expanded from primarily enterprise users to include a large volume of individual users,” said Zoom’s chief marketing officer Janine Pelosi. 

After years of offering a free service without ads, Zoom is now rolling out a pilot advertising programme in order to monetise these users. 

In a blog post announcing the introduction, Pelosi explained the change as a way for the company to offer continued free access. 

So far, Zoom’s ad offering is very limited. The ads, which will only display for Basic users who have joined meetings hosted by other Basic users, will take the form of banners that display in the end-of-meeting browser page. There will be a prompt that urges users to “Upgrade to remove ads”. 

Ricardo Amboage, head of programmatic and display investment at Starcom, welcomed the pilot roll-out of ads on Zoom. 

“It is exciting to see that Zoom is experimenting with advertising opportunities to help support their free service,” he said, “Executed correctly, ad-supported models can prove a real win-win-win: individuals benefit from free access, advertisers have a new moment in which to communicate with customers, and Zoom can maintain a higher user base than if it were purely a subscription service.”

However Amboage does have questions about the offering. 

“More details and testing will be required to understand how attractive the proposition will be to advertisers. Will the ‘end-of-call’ page offer a high attention opportunity, or do users tend to navigate away immediately?,” he said.

A thin line to tread

Although Zoom says that ads are an important step in keeping free access to their service, they have been careful to stress the limited nature of the roll-out of this pilot scheme. In particular, they have stressed their focus on privacy. 

“There is one thing we want to make very clear: as noted in our Privacy Statement, we will not use meeting, webinar, or messaging content (specifically, audio, video, files, and messages) for any marketing, promotions, or third-party advertising purposes,” said CMO Pelosi. 

Ads on communication platforms have proven to be controversial in the past, partly because of worries that companies may use private conversation data for ad targeting. In 2018, Facebook (now known as Meta) announced that it would introduce ads on Whatsapp. But two years later it backed off the plan, after many users (and reportedly the apps’ co-founders) had expressed concerns about ads in Whatsapp. 

Many of those concerns were related to the fact that Whatsapp sells itself as a privacy-first platform. Privacy-conscious users expressed that any type of ad would not be in keeping with this ethos. 

Meta’s other messenger property Facebook Messenger does have ads. Meta insists that it does not use “the content of your messages with other people for ad targeting, which means advertisers can’t target you based on what you say in messages.”

While Facebook doesn’t target you on your message content, it has a wealth of other data to target on. The same cannot be said for Zoom. 

“It is reassuring to see that Zoom is insisting on a user-centric solution (privacy compliant and non-intrusive),” said Starcom’s Amboage.

That’s not to say that Zoom has no first-party data to offer. It is a logged on environment after all, meaning users can be identified by their email address. But this may make Zoom’s data offering reliant on email-based identity solutions.

“However, if Zoom is not providing any first-party targeting then success will rely on matching other (consenting) audiences pools, in a browsing landscape where identifiers are already in diminishing supply,” he added.

 

2021-12-10T11:08:42+01:00

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