How does facebook make money from whatsapp
How WhatsApp Makes Money For Meta Platforms: 2 Key Ways
- Education
- Investing
Updated: Nov. 11, 2022By: Kimberlee Leonard
Table of Сontents
- WhatsApp Basics
- WhatsApp Business Model
- 2 Ways WhatsApp Makes Money
- Bottom Line
WhatsApp is a free messenger service that is used by over 2 billion people around the world. Because it’s free for consumers, it begs the question, how does WhatsApp make money? The Meta Platforms subsidiary makes money through WhatsApp for Business and WhatsApp Pay.
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WhatsApp Basics
WhatsApp was founded in 2009 by Brian Acton and Jan Koum. It’s a free secured messenger service that allows domestic and international communication among users on a secured network. It’s currently headquartered in Menlo Park, California with Meta Platforms, Inc. (META) as the parent company. Facebook changed their corporate name to Meta Platforms in 2021.
Facebook acquired WhatsApp in 2014, making it the largest subsidiary of the company next to Instagram and Facebook Messenger. WhatsApp does not trade independently.
Tip: As a subsidiary of Meta Platforms, investors would buy META to gain exposure to the business of WhatsApp.
As a messenger service, WhatsApp is robust. Users can send text messages, voice messages, make both voice and video calls, share images and documents, and share one’s location. Essentially, anything a user needs to communicate with another is available via WhatsApp.
Users like the platform because it is free with no ads and offers end-to-end encryption, with the company stating that it is not able to read or capture messages.
WhatsApp Business Model
The product of WhatsApp is simple: a robust personal messaging service. How it makes money is a little different than many others in the arena. WhatsApp started as a 'freemium' service, where users were able to send messages for free for the first year and then renew at an annual $0.
99 fee. They have shifted from this business model and stayed away from in-app advertising. Instead, they make money through WhatsApp for Business and WhatsApp Pay.
There are a number of competitors in the market, all who have different business models for revenue generation. Some of the top competitors are LINE, Kakao, Kik, and Skype.
- LINE makes money from in-game purchases and other services such as stickers.
- Kakao generates revenues from advertising.
- Kik gives users rewards for watching advertisements.
- Skype is a subscription service for worldwide calling.
Note: Both Acton and Koum have left WhatsApp after disagreements with Facebook over the way the app would be monetized.
2 Ways WhatsApp Makes Money
1. WhatsApp for Businesses
While the service is free for consumers to use, businesses can sign up for WhatsApp for Business to use the platform for sales and support.
The WhatsApp Business API is used by major brands such as Netflix, Uber, and Wish. It originally encouraged businesses to use the platform and provide quick responses. WhatsApp would charge businesses for delayed responses. So while the business could respond for free within 24 hours, it would be charged a fee for responses later than that.
The new business API for WhatsApp for Business applies charges based on a messaging tier. The charges are:
First 250,000 messages: $0.0085 per message
Next 750,000 messages: $0.0083 per message
Next 2 million messages: $0.0080 per message
Next 3 million messages: $0.0073 per message
Next 4 million messages: $0.0065 per message
Above 10 million messages: $0.0058 per message
Essentially, the more messages a company sends, the cheaper the rate is.
2. WhatsApp Pay
WhatsApp Pay is a payment feature similar to PayPal. Users can send money to friends, family, and businesses for free. The party receiving the money is charged 3.99% per transaction.
Like other money sending services, this app connects to a linked bank account where the funds are taken from or deposited. This service is currently only available in India and Brazil on specific devices.
Tip: Look for WhatsApp to expand WhatsApp Pay in the near future.
You can’t invest in WhatsApp on its own but you can understand how the messenger giant makes money for its parent company, Facebook. WhatsApp is becoming a larger revenue source as it competes to maintain its market share on secure messenger services.
This article was written by
Kimberlee Leonard
207 Followers
Kimberlee brings professional experience to her writing. She started as a FINRA Series 7 broker and later transitioned her career into owning an insurance agency and preparing taxes.
Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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Facebook lifts the lid on how it's making money from WhatsApp
New York CNN Business —
Since Facebook paid a whopping $19 billion to buy WhatsApp in 2014, investors have wondered how it will cash in on the acquisition, especially after the company walked back a controversial plan to sell ads on the app.
On Wednesday, the company finally provided some details on how it’s using WhatsApp to drive ad sales on its other platforms, Facebook (FB) and Instagram.
Businesses that use WhatsApp to communicate with customers and conduct transactions — a group considered key to the app’s future — have since 2017 been able to purchase ads on Facebook and Instagram that include a button allowing users to switch to WhatsApp and initiate a conversation with that business. CEO Mark Zuckerberg said Wednesday there are now 1 million businesses using those “click to WhatsApp” ads.
It’s also launching a new feature: business users will now be able to start creating such advertisements directly from WhatsApp Business app, which wasn’t possible before, making the ad buying process more seamless.
Zuckerberg made the announcement on Facebook’s earnings call for the first quarter of 2021. The company reported total quarterly advertising sales of $25.4 billion, up 46% from the same period in the prior year. It posted earnings per share of $3.30, up 93% year-over-year, on revenue of nearly $26.2 billion. Wall Street analysts had projected revenue of $23.7 billion.
The strong results come despite a slew of issues Facebook faced during the quarter, including fallout from the January 6 Capitol riot and questions about misinformation, continued antitrust scrutiny and privacy concerns after millions of users’ information was posted to a hacker site.
Facebook’s stock rose nearly 6% in after hours trading Wednesday.
The new feature makes use of the WhatsApp Business “catalogues” — basically virtual storefronts or menu on a businesses’ profile where customers can view their offerings. Business users will now be able to select an item from their catalogue and quickly turn it into a Facebook or Instagram ad with a button directing viewers back to their WhatsApp profile.
Previously, business owners had to go to Facebook or Instagram to initiate the ad buying process.
“For a lot of people, online commerce is less about websites and shops, and more about messaging,” Zuckerberg said. “The next step is to make it easier for businesses to adopt all these services and to give them the tools that can handle messages and customer relationships.”
A new feature will let business owners start creating "click-to-WhatsApp" ads that will run on Facebook and Instagram straight from the WhatsApp Business app.
The new feature is a sign that Facebook is doubling down on its plan not to allow ads directly on WhatsApp. Instead, the app’s future revenue potential is likely to come from offerings, like payments and e-commerce.
“I want to be clear — we have a long way to go to build out a full featured commerce platform across our services, and this is a multi-year journey, but I am very committed to getting there,” Zuckerberg said.
As it develops those new business models, the company is using WhatsApp to bolster its core advertising business.
Still, it’s not clear how much of an impact it’s having. The company didn’t disclose sales from the click-to-WhatsApp ads, and the 1 million businesses using them are a fraction of WhatsApp’s 50 million total business users.
(Across all Facebook services, more than 200 million companies use its business tools).
“Over the longer term, there is potential for them to monetize the WhatsApp platform, but that’s going to take time until it’s become a more significant driver [of revenue] but it remains an attractive platform,” Neuberger Berman senior research analyst Daniel Flax said ahead of the earnings report and announcement.
The first three months of 2021 were good for Facebook’s ad business — with many people still stuck at home, mobile advertising was a popular avenue to reach consumers.
Facebook’s ad sales growth was driven by a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered, CFO David Wehner said in the release.
“We expect that advertising revenue growth will continue to be primarily driven by price during the rest of 2021,” Wehner said.
The company also reported an average of nearly 3.5 billion people using its family of apps, including Facebook, Instagram and WhatsApp, monthly as of March 31, an increase of 15% from the same period in the prior year.
In the current quarter, Facebook could begin to face headwinds becuase of Apple’s new app privacy policy as part of its iOS 14.
5 update.
“The impact on our own business will be manageable,” Wehner said of the update. “We continue to expect it will be a headwind for the remainder of the year, but we’re making good progress … on our own solutions to help advertisers navigate these changes, and that includes helping advertisers work with the Apple API as well as our own approach to using aggregated data for targeting and measurement.”
How to make money with content on Facebook
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Pages and accounts that host content for their audience are an important part of the Facebook ecosystem, helping our community and advertisers grow. To help people and companies get a decent and regular income, we create tools for monetization.
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Go to the "Facebook" section in Creator Studio.
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Click the Monetize tab, then click Browse .
Monetization requirements apply to all Facebook tools that allow you to earn money from content.
Access to monetization tools depends on a number of factors. With Creator Studio, you can easily find out if these tools are available to you. To find out if monetization tools are available to you and how to start using them:
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Go to the "Facebook" section in Creator Studio.
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Click the Monetize tab, then click Browse .
How to monetize on Facebook
There are several ways to make money from content on Facebook:
In-Stream Video Ads
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Add ads to your videos
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We automatically identify natural breaks in your videos where it's best to place ads. You can choose your own accommodation if you wish. Your earnings depend on the number of video views and advertisers.
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To create a subscription group, you must be a Facebook group admin and meet the Partner Monetization Terms.
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Monetize with Creator Studio
Section Overview on the "Monetization" tab in Creator Studio has everything you need to make money on content effectively. Depending on the monetization tools you use and your access to them, you will see some or all of the following sections.
Check if you qualify.
You can see which Pages you can already earn on and how to access monetization tools.
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How WhatsApp makes money | iPhone News
In 2014, Mark Zuckerberg bought the WhatsApp app from its developer for nearly $20 billion. Seven years later, only he and his team of accountants know for sure whether this operation was profitable or not.
It is clear that the value of this application lies solely and exclusively in the huge portfolio of users that you control with it, and in the valuable information that its domain offers you.
Although WhatsApp is end-to-end encrypted, I don't believe that Zuckerberg is somehow not profiting in some way from said app, which is still free and ad-free today...
WhatsApp has undoubtedly become the messaging app that has the most users across the planet. Billions of people use these chats on a regular basis every day. It is far superior to other apps like FaceBook Messenger, WeChat or Telegram.
The current success of this application is due to several factors. The first reason is that it was the first instant messaging app to hit the market and it quickly became very popular. Another reason, no doubt, is the ease of handling and reliability. Except for the rare occasions when its servers go down, this app always works very well. And perhaps most importantly, it's free and without ads. And that's when the question arises: is Zucherberg losing money with WhatsApp?
Postal code
- 1 A bit of history
- 2 2014 was a defining year for WhatsApp
- 3 What's new?
- 4 WhatsApp payments
- 5 Rocky hopes to tire Ivan Drago
A bit of history
They say whoever hits first, hits twice.
WhatsApp was launched in 2009. At that time, the only way to send instant messages from mobile to mobile was by SMS or between Blackberry terminal owners (which I include myself) who had their own WhatsApp application. of course, it only worked between mobile phones of this brand.
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In the early years of WhatsApp's existence, the first year was free, and the second year you had to pay 89 cents for an annual subscription. It was already customary for iOS users to pay for an app, but many Android users made their first payment on Google Play thanks to this subscription.
The mentioned subscription was not very serious. Many times the app itself has been renewed for another free year before the end of the first year. WhatsApp wanted to reach as many users as possible, even if it had to give away millions of annual subscriptions.
Finally, in 2014, seeing that the annual subscription fee issue had yet to materialize, and fearing that users would emigrate to a new competitor in the messaging world like Telegram, WhatsApp went free forever.
2014 was a defining year for WhatsApp
In 2014, Zuckerberg bought WhatsApp for $20,000 billion.
2014 was a year before and after for WhatsApp due to two very important events that undoubtedly marked the trajectory of the app and why it is still free.
First, because WhatsApp was acquired by Mark Zuckerberg (no need to explain who it was at this point in the movie) for almost $20,000,000,000. There was a lot of speculation at the time about Zuckerberg's intentions for this purchase. We all thought that WhatsApp would be integrated into FaceBook, which would bring all users together in one application. We were wrong, or it was just Mark's idea, but he couldn't bring himself to do it.
And secondly, out of nowhere, a new messaging app appeared out of nowhere: Telegram. Tough Russian competitor, like Ivan Drago in Rocky Balboa. Pavel Durov and his development team launched a messaging app that made Zuckerberg himself, who already had his WhatsApp in his pocket, wince, wanting to use it and return those twenty billion dollars.
And the owner of FaceBook and Instagram had to seriously rethink what to do with WhatsApp. "Ivan Drago" from the messengers was taller and stronger than him. It had very strong points: your messages were much more secure because they were encrypted, it was truly cross-platform, it could be used on multiple devices at the same time (like a PC), and it was completely free and without ads. A very powerful threat.
And Zuckerberg panicked. He knew that any wrong step would force millions of users to switch to the cool new Telegram, and if they tried, they would never go back. So it's been a few years, and the CEO of Facebook is still not moving.
Telegram is still free and ad-free, and while you can wait, WhatsApp will stay the same. So Zuckerberg, seeing that he couldn't "touch" a private user, decided to start a business with WhatsApp for companies.
What's new?
With WhatsApp Business, the platform starts to generate income.
WhatsApp Business is an application created in 2017 and focused on business companies.
It was created so that small businesses can communicate with their customers, show them their products and services, as well as be able to communicate with customers during their purchase and answer their questions.
A good way to connect the company and the client, allowing you to create a virtual catalog to display products and services, as well as use special tools for automation, ordering and quick response to messages. There are free services and there are paid ones.
And in addition to charging for these services, through WhatsApp Business, Zuckerberg collects a lot of very valuable business information that can be used on other platforms such as Facebook.
WhatsApp payments
WhatsApp Payments will be Zuckerberg's next step in making money from WhatsApp. A payment service similar to the well-known Bizum. And again, with the fear of “offending” the end user, payments and income will be free for him, and companies will pay.
It started working in Brazil last year and it is expected to be extended to more countries in this new year 2021.
