Ads on WhatsApp

By Amy Perkins, Business Director, FAST & Paid Search, Mindshare

Background:

This week, Facebook confirmed that ads would begin appearing on WhatsApp in the ‘Status’ feature from 2019. The ‘Status’ feature is similar to Stories on Instagram and Facebook, letting users upload Snapchat-style pics and videos that can be viewed for 24 hours. Facebook wants to interrupt some of these with short ads. Considering WhatsApp has 1.5 billion users each month and enables 60 billion messages per day between these users, this opens a door to a whole new advertising platform with a very large audience base.

Details and Implications:

Facebook bought WhatsApp in 2014 for $22bn, making it one of the largest tech acquisitions ever seen. WhatsApp is not currently monetized directly within the app in any way, which makes the advent of advertising a potentially major new revenue stream for Facebook and an exciting new social channel for advertisers.

The only commercialisation of the service to date was the launch of WhatsApp for Business, allowing Facebook to charge business owners for additional commerce, customer service or broadcasting tools in the app. However, the arrival of advertising on the platform is a much bigger step.

Ads will feature in the Status feature of WhatsApp – which operates in much the same way as Stories across Facebook, Instagram, and Snapchat – allowing users to share a mix of text, photos, videos and animated GIFs that disappear after 24 hours. WhatsApp reports that some 450 million people worldwide already use the Status feature, making it a very large new audience to target.

In the UK, WhatsApp is installed on 84% of all Android devices, with 56% using it daily. In terms of emerging markets, according to Statista, WhatsApp penetration is particularly high within Mexico (56%), Brazil (56%), Turkey (50%) and South Africa (49%). More developed markets such as Saudi Arabia (73%), Malaysia (68%) and Germany (65%) also have high penetration. This opens an additional opportunity to target consumers in these markets through a media that is part of their daily lives.

It’s possible that advertising could just be the first step in a wider expansion of the WhatsApp services. Facebook has many potential services that it could migrate to WhatsApp – for example, it is starting to experiment in transactions within Facebook Messenger by letting users order an Uber or Lyft within the platform. Making this kind of service and others available inside WhatsApp could help it become more like the multifunctional WeChat, China’s principal messaging service that boasts 1 billion monthly active users worldwide.

WeChat also began as a messaging app that slowly expanded to become a lifestyle app serving a multitude of users’ needs – from ordering food to paying utility bills to accessing government services – and all paid for through WeChat’s baked-in payment service, WeChat Pay, which has become a solid revenue generator for WeChat by taking a slice of transactions completed in the app.

Summary:

Considering 450 million people worldwide already use WhatsApp’s Status feature, Facebook monetizing the messaging app will enable brands to target a large new audience base. If Facebook continues to develop the app to replicate WeChat, this will make WhatsApp a key differentiator in messenger platforms outside of China and bring an even bigger opportunity to global brands.

Further Reading:

The Independent / Mobile World Live / TechCrunch