Online Advertising Social Media

The monetization of WhatsApp

Did you know that WhatsApp, first worldwide instant messaging service, with 1,5 billion of active monthly users, was ad-free? Well, this will not be true anymore in a few months. In 2019, 5 years after its acquisition by Facebook, WhatsApp will start incorporating ads on its service.

What is WhatsApp?

WhatsApp is a mobile application, founded by Jan Koum and Brian Acton in 2009, allowing people to communicate freely as long as they have an internet connection. It is the first instant messaging service today in terms of users.

Like other social media platforms, users can text messages, send voice messages, group chat, have voice and video calls, share photos videos and documents. WhatsApp ensure its users an end-to-end encryption solution to secure their messages and calls, plus a synchronization option on web and Desktop allowing to have chats via computers.

In 2014, WhatsApp was bought by Facebook for $22 billion according Forbes’ report, and was supposed to remain free from monetization pressure for five years, accordingly to the wish of the two co-founders. Both have now left WhatsApp due to misalignment with the monetization strategy developed on the platform through advertising, according to the Wall Street Journal’s report. A position in contradiction with Facebook policy and other products of the group such as Facebook Messenger and Instagram.

Some key figures to understand the monetization potential of WhatsApp:

With 1,5 billion monthly active users, WhatsApp is the first worldwide instant messaging service according to Statista, beating Messenger and WeChat.

Launched in February 2017, WhatsApp Status counts 450 million daily active users worldwide, according to Business Insider. WhatsApp Status are similar to stories on Instagram and Facebook. WhatsApp is thus the first social media regarding stories daily users.

The way to monetization:

Since the departure of the two co-founders, WhatsApp keeps moving forward towards an increased monetization of its platform.

The first sign of this trend was the launch of WhatsApp Business in January 2018. This free application allows owners of small businesses to interact easily with their customers thanks to various features. Users can create a business profile containing helpful information for customers (description, location, opening hours). The application offers users the opportunity to set-up quick replies and to re-use them. It also gives the opportunity to respond instantly with automated message (away messages for example). Businesses can also get analytical insights.

WhatsApp then launched its Business API (application programming interface) in August 2018. This API is dedicated to medium and large businesses with two main features. The first one allows companies to send messages to their customers with practical information (related to a purchase such as shipping for instance). Companies are charged for sending notifications and it must remain non-promotional.  On the other hand, the goal is to enhance customer services with the option for businesses to answer customer’s messages for free during 24 hours. After that, they have to pay to answer. Based on these features, Facebook advertisers will be able to add a CTA (call-to-action) to WhatsApp on their Facebook ads, it will automatically open a WhatsApp conversation between the customer and the company. WhatsApp Business API is in a beta version and is still being tested with companies.

Last but not least, in August 2018, it was reported in the Wall Street Journal that WhatsApp had plans to start selling advertising in 2019 within its Status feature, between user stories.

With these various initiatives, Facebook target $10 billion revenues within five years of monetization, according to Forbes’ report.

What’s next?

WhatsApp number of users prove a strong potential Audience and help to better understand Facebook advertising strategy on this platform. As of today, the only ad inventory mentioned by Facebook for 2019 is the Status but we will very likely see the emergence of other formats.

I do anticipate that WhatsApp advertising will soon encounter some limits. Contrary to Instagram or Facebook, WhatsApp is mainly used for personal communication, and users might get upset with the addition of ads. WhatsApp won’t offer to the brands the opportunity to build a strong image as Instagram. I think the future of WhatsApp for Business will be focus around customer service and conversational marketing. Brands will have to adapt their communication to the way people communicate on WhatsApp and Facebook will need to be really cautious not to copy its other products business models.

Sources:
WhatsApp website
eMarketer report: Messaging Apps and Marketing 2018

About the author

Avatar

Léna Sappey