Why Facebook Is Making Moves to Monetize WhatsApp

Opinion: The messaging app is not generating revenue for its parent company

If Facebook makes ads available in WhatsApp, the company will need to do so without threatening the user experience
WhatsApp

WhatsApp’s moment of truth has come. With more than 1.5 billion monthly users worldwide, it is one of the most used communication applications. The problem is, the app is not generating revenue for its parent company, Facebook, because WhatsApp lacks a subscription model to charge its users. For this reason, Facebook has been investing heavily in making its messaging platform friendlier for businesses.

A new WhatsApp Business API

The newly released WhatsApp Business API (application-programming interface) will make it easier for companies to communicate with current and potential customers through end-to-end encrypted messages. Businesses will now be able to send customized notifications with relevant non-promotional content such as shipping confirmations, appointment reminders or event tickets, all at a flat rate.

Facebook claims that it has been testing the new API with several companies like Sale Stock, which has been using it to deliver product recommendations, order updates and customer service. Surprisingly or not, customers read 90 percent of delivered messages, according to Sale Stock’s reports. This number is highly attractive for brands that are looking to connect with their customers in a meaningful way.

Ads that click to WhatsApp

In an effort to increase customer interaction, Facebook is also enabling businesses that advertise on the social network to start a chat in WhatsApp with Facebook ads that click to WhatsApp.

The functionality is simple: Users who click on the ad are taken to a pre-filled chat in the WhatsApp app. Brands will be able to track their success with new metrics such as conversations started and messaging replies.

This new functionality could be of great value for companies in the home improvement industry, for example, who require customers to provide certain information before giving a quote or providing a service.

The first step toward monetization

Even with the new functionality, WhatsApp is not yet generating revenue. Ads that appear on Facebook and click to WhatsApp create revenue for Facebook, not WhatsApp. Nevertheless, the ads are the first step towards WhatsApp’s monetization.

I believe that Facebook is getting WhatsApp ready so that soon, advertisers will have the opportunity to run ads inside WhatsApp. Serving as a bridge between the two platforms, ads that click to WhatsApp is Facebook’s latest attempt to drive more traffic to the messaging app in anticipation of the possible introduction of ads running inside WhatsApp.

If Facebook makes ads available in WhatsApp, the company will need to do so without threatening the user experience. The wrong ad size, appearance or placement inside the app could cost WhatsApp thousands of loyal users, as they could easily jump to a similar ad-free messaging platform like Telegram or GroupMe.

Consider, for example, Facebook Messenger ads. They can sometimes be too large when compared with the overall chat window. This limitation could be part of the reason why we have not seen outstanding results with this ad placement.

Messaging is personal and intimate, so ads that appear to be out of place and feel intrusive will not yield the desired results for advertisers. Getting the size and appearance right, on the other hand, could bring positive results not only for brands, but also for content-hungry users who do not spend much time on Facebook or Instagram.

Facebook’s recent developments mark a new era for WhatsApp. Will Facebook be able to seamlessly incorporate ads that deliver value to both users and businesses?

Héctor Ariza is a digital marketing associate at digital agency True Interactive.