Facebook has been at the forefront of leveraging its vast user base for profit across its various platforms. Which leaves many wondering what’s up with Facebook’s WhatsApp? After acquiring WhatsApp for $19 billion in 2014, Facebook has yet to focus on turning the popular chat app into a money maker. With over a billion users, one of the largest user bases in the world, maybe it’s time for Facebook to boost WhatsApp.
WhatsApp’s current monetization is paltry, especially when compared not only to Facebook’s other platforms but to the WhatsApp user base. WhatsApp crossed 1 billion users in 2017 and reached 1.3 million users this past August. Competitors to WhatsApp, including WeChat and Line, have already been able to monetize their user bases through an array of features such as advertisements, games, online payment functions, and in-app purchases. Many features that Facebook itself offers on platforms like Facebook Messenger. It would appear that Facebook has the opportunity to generate a meaningful revenue stream from the platform over the next couple of years.
WhatsApp’s User Base
Teenagers have been abandoning Facebook in favor of messaging apps like WhatsApp and WeChat for years. Messaging apps offer private chatting with people you are friends with in real life where users can partake in dynamic real-time chatting with different groups of friends. Many teenagers find messaging apps to be more personal than posting on other social media platforms.
In the world of messaging apps, WhatsApp has become the mainstay of messaging on the smartphone. Already with 1.3 billion users this year, as global smartphone penetration improves, the user base will only continue to rise. But not only are total users on the rise, engagement levels on the messaging platform are also high. There are over 55 million messages being exchanged on WhatsApp each day. That translates into more than 42 messages per person per day. And these users aren’t just sharing text messages, they are sharing 4.5 billion photos and one billion videos per day. With such high engagement, the opportunity for monetization on the messaging platform is also high.
Up to now, Facebook has been more focused on continued user growth on the platform rather than monetization. There has been some push of WhatsApp on the Facebook platform as Facebook tested a WhatsApp button in its main app earlier this year. In September, users reported seeing a dedicated WhatsApp button in the main Facebook app on Android. When clicked the button acted as a shortcut, opening WhatsApp without the need to leave the Facebook app. This isn’t the first time that Facebook has experimented with integrating one of its subsidiaries into the main app.
And while Facebook doesn’t seem to be a hurry to monetize WhatsApp, they might be looking to replicate the model implemented by WeChat which has close to 890 million users. There are a variety of ways the Facebook might monetize its WhatsApp user base including implementing a payments service, in-app purchases, and in-app advertising.
Payments service: Facebook is already integrating payments into its Messenger app, and although Facebook hasn’t monetized that service on Messenger, they could choose to monetize a payments service for WhatsApp. If Facebook extended this functionality to other markets it could even further improve monetization rates.
In-app purchases: These in-app purchases could include everything from games to stickers. In-app purchases already represent a key source of monetization on the messaging apps Line and WeChat. If in-app purchases work for those messaging apps, then there ins’t a reason they can’t work for WhatsApp as well.
In-app advertising: WhatsApp’s status is similar to Snapchat in turns of average daily active users, to the tune of 300 million. Snapchat took the plunge to include in-app advertising with ads showing up between Snaps as well as other advertising options from filters to lenses. WhatsApp could follow Snapchat’s lead and integrate ads into WhatsApp Status.
Another monetization option for Facebook is to start charging companies to contact its users. Facebook has been testing tools that could allow business to offer sales and support services to its users to agree to be contacted. These business chat services would be available in various tiers for businesses of every size.
WhatsApp announced last year it would eventually begin testing tools that could let users communicate with companies via secure messages. That announcement was part of a broader overhaul to make the service more business-friendly. While the business features are being tested by companies in Brazil, Europe, India, and Indonesia, there has been no announcement as to when they would be rolled out to a larger audience.
If you’ve been wondering what’s up with Facebook’s WhatsApp, you aren’t the only one. With 1.3 billion users now seems like the time for Facebook to focus on monetizing WhatsApp. With competing messaging apps already monetizing their user bases WhatsApp has some monetization ideas on where they might start.
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