Meta is rushing to monetize WhatsApp, which it acquired in 2014 for $22 billion.
There is a sense of urgency inside Meta.
As growth slows, CEO Mark Zuckerberg continues to make risky bets on the metaverse. To address the criticism directed atThe company is now trying to monetize WhatsApp.
Meta acquired WhatsApp for $22 billion in 2014, when Meta was still called Facebook. Even though WhatsApp had grown to 400 million users in five years at the time, that’s a staggering amount for a nondescript free chat app. This is still the largest acquisition in meta history, but the investment has not been directly recouped at this time.
Most of Meta’s revenue still comes from advertising. The road to WhatsApp monetization is long.
Non-advertising revenue from Meta’s various chat apps is included in the “Other Income” section. Most of that revenue comes from WhatsApp, which posted a modest $192 million in Q3 2022. Total revenue for the quarter was about $28 billion, mostly from digital advertising. This revenue amount was down 5% year-on-year, marking the second consecutive quarter of decline.
WhatsApp’s long-lost monetization is a concern for Meta right now, with slowing revenue and user growth and a sluggish stock price. Matt Idema, Meta’s vice president of business messaging from 2021, told Insider:
“How to develop business on this existing chat application is a very big challenge.”
Matt Idema is vice president of Meta’s business messaging business.
IDEMA’s current answer to this challenge is to build a “business messaging” strategy. That means businesses use WhatsApp to chat, advertise, and interact with customers.
In the early days of COVID-19, when people around the world were forced to stay home, seeing more people using WhatsApp to contact businesses,Aidema reaffirms how heavily the app is used and how poorly monetized it isIt says.
The biggest source of revenue for WhatsApp right now is called message-driven ads or WhatsApp-driven ads. Advertisers pay to message users and communicate via WhatsApp.
Still looking for monetization
Since the WhatsApp acquisition, Meta has been figuring out how to monetize, according to two former Meta employees who worked on WhatsApp. The company is now resuming the effort because it has become “imminent” to provide a direction for revenue growth.
The former employee, who spoke to me, said that WhatsApp should have had a fully integrated payments feature years ago, and that it “should have been making a decent profit already. I fell behind,” he says.
Speaking in a conference room at Meta’s headquarters in Menlo Park, Idema did not dismiss concerns that WhatsApp was taking too long to become a mainstay of Meta’s revenue.Getting WhatsApp’s business off the ground has become an imperativeand speak.
“At the time[in 2017, when Idema took over as business owner]WhatsApp had a billion users and was completely unthinking about business,” said Idema.
With 2 billion users on WhatsApp today, the company is still trying to figure out what kind of business model will work.
WhatsApp and advertising are incompatible
Idema initially said it “made several attempts” to use WhatsApp within Facebook’s giant “digital advertising machine,” but those attempts fell through in 2020. Perhaps it was destined to fail from the beginning. That’s because advertising is the antithesis of what WhatsApp was designed to do in the first place.WhatsApp has long had a policy of not posting ads.That attitude hasn’t changed since it was acquired by Facebook.
So where does WhatsApp make money instead of using the digital advertising strategies that have made Facebook one of the world’s greatest companies? It’s behavioral analytics within the app. Specifically, small and medium-sized businesses are analyzing behaviors such as texting customers, fulfilling orders, and running businesses through WhatsApp. WhatsApp’s focus markets include India, Brazil, Indonesia and Mexico.
Aidema also hopes to sell customer service software and WhatsApp’s API so that it can integrate with other apps. WhatsApp’s free API was used by 50 million companies as of 2019, and that number is said to have skyrocketed due to the pandemic (Idema did not disclose figures at this time).
WhatsApp wants to increase the number of businesses using its paid customer service features, especially in North America. That’s why Facebook (now Meta) bought customer management system Kustomer for a reported $1 billion in 2020. Gone are the days of long waits and toll-free calls for simple inquiries, just use WhatsApp.
Aidema cited one success story, the use of WhatsApp by General Motors (GM) in a campaign in Brazil in 2021. In the campaign, GM used messaging ads on Facebook and Instagram to direct people looking to buy a new car to its dealerships via WhatsApp. GM said it sold 3,000 cars in a month, and all the transactions were done over WhatsApp.
Learn from WeChat
China’s Tencent has expanded WeChat’s capabilities and grown it into a “super app.”
With new features, WhatsApp could turn into a super app where you can communicate, shop, order and pay all within the app.
WeChat is the first super app that comes to mind. Launched by Tencent in 2011, WeChat is now a hugely popular social media platform that allows users to do everything from video calling and texting to games, taxi hailing and shopping within the app. WeChat’s payment function is also used everywhere in China, and there are many places where WeChat is the only payment method for buying clothes and eating.
As of June 2022, the total number of daily active users (DAU) of all Meta-affiliated SNS apps is 2.8 billion, but WeChat’s DAU has exceeded 1 billion as of 2019. “There’s a lot we can learn from WeChat,” Aidema said.
In August 2022, WhatsApp announced a partnership with Uber in India, its largest market with 500 million users. In India, you can now request an Uber ride through WhatsApp. In the same month, it also announced a partnership with Indian retailer JioMart. The service, which took two years to develop, will allow “end-to-end” shopping for the first time on the app.
Ajit Verma, Head of Product at WhatsApp.
“The challenge for us right now is how to accelerate our expansion,” Ajit Verma, WhatsApp’s head of product, told Insider.
But the effort to accelerate growth is also frustrating for users. Many users on social media have complained about receiving spam messages from companies via WhatsApp.
Still, WhatsApp is poised to take a bold step. Varma wants WhatsApp to be used by “any company in the world,” from automakers to airlines to cable TV stations. To make this ambition a reality, it still needs a payment function. WhatsApp currently only allows person-to-person transfers.
One message strategy
Meta is putting a lot of effort and resources into WhatsApp right now — though that doesn’t necessarily guarantee success.
In May 2022, Meta held its first conference dedicated to the messaging business. Zuckerberg gave a keynote address, urging companies to use WhatsApp’s API.
WhatsApp is currently running an extensive marketing campaign. In the last two earnings calls, Meta executives have consistently mentioned the messaging business.
During the first quarter of 2022, Zuckerberg cited WhatsApp as one way to deal with less targeted advertising as Apple’s privacy policy changes. Zuckerberg recently touted that WhatsApp is safer than iMessage.
Aidema, who believes WhatsApp’s use by businesses “hasn’t plateaued yet,” says it’s time to treat WhatsApp, Facebook Messenger and Instagram as a “single messaging strategy.”
Today, 1 billion people communicate with businesses through Facebook every week. Though Iidema didn’t provide specific growth projections, it does say it’s confident WhatsApp will have more features in the next three years.
[original text]
(Edited by Ayuko Tokiwa)
Source: BusinessInsider
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