Almost a decade after acquiring WhatsApp for $19 billion, Meta, the parent company of Facebook, is still working to make the messaging app profitable. Alice Newton-Rex, the WhatsApp product director, has stated that the company’s focus is on business messaging. Although WhatsApp has seen continued growth, with over 2 billion users now, it still generates limited revenue compared to other platforms like Instagram, which display ads. Meta has no plans to sideline WhatsApp and aims to expand its usage in large businesses globally. Companies pay to use WhatsApp as a main communication channel with customers, with fees ranging from a half-cent to 15 cents per conversation.
WhatsApp’s popularity is strong in countries like Brazil and India, where people use it for various purposes, including booking Uber rides and getting Netflix recommendations. Meta sees the potential in WhatsApp and aims to unlock its business potential by building features and attracting more large businesses. Mark Zuckerberg, the Facebook founder, has expressed ongoing support and sees WhatsApp as the “next chapter” for Meta. WhatsApp’s affordability and ease of use have made it a vital communication tool, particularly in regions with limited telecommunications infrastructure.
The value of WhatsApp to Meta has been unclear to analysts and investors. Estimates put the revenue of WhatsApp at less than 1% of Meta’s total sales, compared to Instagram’s projected $40 billion in revenue this year. WhatsApp’s business challenge stems from its origins, as the co-founders were opposed to advertisements. However, Meta initiated the WhatsApp Business app in 2018 to allow companies to communicate with users, and sales in Meta’s “Family of Apps-other revenue” segment, which includes the WhatsApp Business platform, grew 12% in 2022.
Meta’s strategy includes the use of ad products, such as “click-to-message” ads, which redirect users to WhatsApp to initiate conversations. While companies cannot run ads directly on WhatsApp, this strategy has proven successful, generating billions in annualized revenue. Meta has also introduced new features like WhatsApp Channels, which function as a private broadcast service. Overall, Meta remains optimistic about WhatsApp’s future and its potential to contribute significantly to the company’s bottom line.