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WhatsApp Business API: the WhatsApp revenue model
The WhatsApp Business API has been launched in a limited beta version and allows companies to communicate with their users via WhatsApp. In addition to the manual sending of WhatsApp messages, this API also offers the option to send personalized transactional messages automatically. Users must have registered or given an opt-in opt-in to be able to receive the messages.
For the sending of updates and notifications such as flight tickets, order confirmations, or reminders for appointments, the added value of the WhatsApp Business API is obvious. It enables companies to reach their customers in a familiar and natural way, via the channel the consumers continuously use anyway.
Jan Koum, former CEO WhatsApp
Contrary to platforms like Viber, WeChat, Instagram, and Facebook Messenger, WhatsApp deliberately chose not to allow ads or promotional content in order to ensure an optimal user experience. Besides that, the consumer first must give his consent before the company can send the user personalized content.
When you, as a company, decide to send promotional content, you first have to communicate clearly for which type of content the consumer registers. And lastly, the consumer needs to perform a specific user action, such as by storing a phone number or ticking a box to give his consent.
But what will happen when Facebook decides to allow companies to advertise via this channel? Would the consumer still be willing to use the chat service or would he feel that it infringes on his privacy?
The WhatsApp revenue models
After Facebook paid 19 billion for the takeover of WhatsApp, we only had to wait for the rollout of a revenue model. The fact that there still is no revenue model is, of course, because WhatsApp faces the challenge not to deter the 1.5 billion users with the intended commercial plans for the messaging app.
Himanshu Gupta, former head of WeChat’s marketing & strategy department in India, recently published an interesting article about this topic. We agree with Gupta and expect that WhatsApp is considering the 3 revenue models described below.
1. Business API
With the launch of the Business API, WhatsApp has taken a clear step to realize revenues from companies. This API enables companies to proactively send transactional messages to customers. You could think of coupons, invoices, boarding passes, or notifications. These messages are called template messages and have a fixed layout with personalized variables.
The companies pay WhatsApp directly for the template messages, whereby the rates per country differ and will be higher than the rates for SMS messages.
Until now, WhatsApp maintains a firm control on which companies are given the WhatsApp Business API and which type of messages they are allowed to send. It is expected that the current beta API will become wider available next year.
2. Advertising options via status updates
The second way for WhatsApp to receive revenues is via the status fucttion within the app. For this, WhatsApp can follow the example of Instagram, where companies pay to share their content via Instagram Stories. To make this a success, WhatsApp needs to be given a new design in which the status updates become more prominent because, until now, the status update in the messaging app is nearly invisible.
The status function consists of a separate, public feed, whereby the user decides whether or not to view the feed. When companies use this feed to advertise, the idea of an infringement of privacy and impact on the user experiences will be less. This is because the user is not interrupted by an advertisement within the conversations.
3. “Message us” advertisements on Facebook & Instagram
The last option for Facebook to earn money with WhatsApp is by means of Facebook & Instagram ads. Last August, Facebook started to sell ads with a “message us” advertising goal.. This will have to trigger consumers to initiate conversations with companies via a Facebook or Instagram advertisement. They already do this now with Facebook Messenger and it is expected that they will also start to use WhatsApp.
With this approach, Facebook makes the consumer the initiator of the conversation. On the other hand, Facebook runs the risk that it cannibalizes its own advertisement revenues because, as soon as companies are given the option to reach the consumer via a direct channel, there is the chance that the consumer is going to ignore Facebook advertising.
Thanks to its huge reach, WhatsApp is interesting for marketers. The success of WhatsApp, however, lies in the easy, personal, and familiar user experience. And the founders had good reason to adopt the motto “No Ads, No Games, No Gimmicks”. This is why pushing commercial messages and making the option for advertisements available will have to be introduced very gradually and with great care. Facebook will have to walk a very thin rope to achieve this. If the 1.5 billion users find it difficult to accept the revised app and decide to turn their backs on the platform, finding a revenue model will be least of Facebook’s concerns.