The company that Facebook acquired in 2014 for $22 billion dollars so far has not made big bets for monetization. But in 2017, the free instant messaging application launched WhatsApp for Business, allowing companies to stay in touch with their users on WhatsApp.
WhatsApp is reaching agreements with telecommunications, insurance, and IT companies to sell its WhatsApp for Business solution to businesses as it attempts to find new ways to earn revenue from the more than one billion users who use the messenger each month.
WhatsApp for Business is sold as a replacement for text-based notifications and conversations between a business and its customers.
The company currently offers its services to a number of other consumer technology companies such Netflix. For example, Netflix will send you a notification when a new program is published. More than 100 companies now use WhatsApp for Business APIs.
Instead of selling the solution directly to user companies, as has been done in the past, the idea is to create an ecosystem of companies that handle the sale of solutions using WhatsApp for Business.
It seems that the model to follow is the one that once existed with SMS where value-added service companies were licensed to sell services such as notifications and advertisements based on SMS, without the intervention of the main provider.
For example, the company sells each notification for 0.82 cents, of which 0.42 cents is WhatsApp’s fee. The platform charges a flat fee of 0.4 cents per conversation. Prices range from 0.5 to 9 cents per message and may vary by country and volume. Conversations are free if the user initiates a chat and the company responds within 24 hours.
Unlike its parent company Facebook, WhatsApp has so far not used advertising to make money. However, with the departure of WhatsApp co-founders Brian Acton and Jan Koum from the company, the cover has been cleared to unify the underlying technology that drives WhatsApp, Instagram and Facebook Messenger.
In August of last year, WhatsApp said it will begin showing ads to users through the Story feature. This movement is possible due to Stories are a public feed and that by advertising through the story feed, WhatsApp does not violate users’ privacy.
Because WhatsApp’s messages are encrypted, it would be difficult for the company to target users with ads as accurately as Facebook Messenger or Instagram. But by integrating the three services, Facebook could potentially match users using their phone numbers and better target them.
WhatsApp had also launched peer-to-peer payments, specifically in India, but has not been able to expand it beyond one million users due to regulatory issues.
The legislation required WhatsApp to create an Indian entity, store the financial data locally and make it available to the central bank for periodic audits.