Social-media giant Meta Platforms (META) is going through a very tough time.
The parent of Facebook, Instagram and WhatsApp is being mocked and is watching the bond of trust with investors crumble day by day. Meta shares are down 62.3% since January, reflected in a fall in market value of nearly $570 billion.
Blame it on formidable rival TikTok for taking market share in ad revenue and on Apple (AAPL) for limiting Meta's ability to send targeted ads to iPhone owners using its apps. Apple has indeed changed its privacy policy and now gives its customers control over which apps they want to allow to track their internet habits.
The metaverse, which CEO Mark Zuckerberg has touted as the next big thing, has so far only suffered colossal losses. Zuck and Meta are therefore up against the wall to find growth drivers and appease investors' loss of patience.
In these columns, we put forward the idea that Meta should monetize WhatsApp by giving advertisers the opportunity to promote their products and services on the messaging platform, which is present in more than 180 countries and has more than 2 billion users.
Oct. 26: Q3 Earnings Call
WhatsApp is a veritable gold mine, we wrote. It's up to Zuckerberg and Meta to mine it.
Meta has no plans to bring ads on WhatsApp at this time, according to sources familiar with the matter who asked not to be identified in order to speak candidly. The social-media giant fears that ads will change the experience of users who are accustomed to a no-ad platform.
But Meta may change its plans in the near future, the sources say. Zuckerberg could discuss the question of WhatsApp monetization during the third-quarter-earnings call on Oct. 26.
WhatsApp at one point had considered introducing advertising in the "status" section of the application, and ultimately abandoned the idea. But it could revive these plans, the sources said.
According to a WhatsApp spokesperson, the platform "is focused on building new features to help businesses maximize the value of its service today and believes the opportunity with business messaging is significant."
Focus on Three Opportunities
The WhatsApp monetization plans currently focus on how to generate revenue from messaging, as consumers shift their communication habits away from legacy channels like phone and email. The platform is working on three opportunities.
The first is to generate indirect revenue from advertising. A program called "Ads That Click to WhatsApp" gives small businesses using the app as their main client communication channel an extra opportunity to attract new customers if they advertise their products and services on Facebook and Instagram.
A button with the WhatsApp logo is inserted in an ad. When an interested potential client clicks the button, they are connected directly to a WhatsApp conversation with the merchant. The analogy within Meta is that Facebook and Instagram are the storefronts while WhatsApp is the store counter, where you close the deal and pay. Messenger, Meta's other messaging platform, offers a similar service.
A bit more than million active advertisers use this service. It's "already a significant revenue opportunity" for WhatsApp, a source said. The majority of these corporate clients are in high-potential markets such as India, Brazil, Indonesia, Mexico and Africa.
There is a disadvantage relating to privacy: Since the users go through Facebook and Instagram, Meta collects their data.
The second opportunity is what WhatsApp since 2018 has also been offering to large companies as an alternative to their customer service.
The WhatsApp Business API enables these businesses to integrate WhatsApp chat into their websites, offering customized client experiences. Chatbots can respond to basic client requests while humans can take over for more complex queries.
WhatsApp currently charges for each client conversation encompassing all messages exchanged within 24 hours.
Meta is pinning many hopes on this product to boost revenue from WhatsApp.
A Monthly Subscription
As a third revenue opportunity, the platform for the past 10 days has also been testing a premium service for small businesses.
This service comes in addition to the WhatsApp Business App. That's a stand-alone app, launched in 2018, enabling small businesses to showcase their products and services and communicate with customers for free. The service had 50 million customers in 2020. WhatsApp does not give new figures, but in view of the pandemic, this number must have increased.
The premium service will offer advanced tools to merchants. For example, they'll be able to manage the same WhatsApp account on several devices. In other words, employees of a local nail salon will be able to chat and manage customer requests via different devices, enabling them to distribute requests to multiple employees.
WhatsApp will also offer small businesses the possibility of hosting a custom URL, which could serve as their own miniwebsites.
The company is considering charging a "small fee" for the premium service, but has not yet determined the amount, which will vary by country. Testing of the service and its pricing continues, the sources told TheStreet. The service will be a monthly subscription.
It is still too early to draw conclusions from the initial feedback. WhatsApp plans to launch the service in 2023, the sources said.
