With the debut of WhatsApp Business in 2018, small businesses were given access to free, straightforward tools for client communication.
Now, Mark Zuckerberg is placing a wager that it will be the next significant source of Meta's revenue.
"WhatsApp is truly going to be the next chapter, with business messaging and commerce being a significant issue there," he recently told CNBC, referring to the social media platforms Facebook and Instagram.
With American customers, WhatsApp is already hugely popular. Currently, Meta Platforms is focusing more on expanding its small company clientele.
In 2018, the Facebook parent company launched WhatsApp Business, providing small companies with free, straightforward tools to help them stay in touch with their consumers and give them a means for them to directly communicate, search for products, and express interest in making purchases.
The company is doubling down on a more recent advertising format called "click-to-message," which enables customers to click on a company's ad within Facebook or Instagram and directly start a conversation with that business on Messenger, Instagram, or WhatsApp. Soon the company will roll out a premium service to small businesses.
According to analysts, these approaches give Meta the chance to increase advertising revenue, maintain its relevance with small firms, and earn extra money from the premium services it provides.
Discover more within the Metaverse
In October 2014, WhatsApp was purchased by Meta (formerly Facebook) for almost $22 billion. Since then, experts in the field have been keeping a careful eye out for any indications the firm intends to monetize the platform more. This moment might be that moment.
According to Mark Kelley, managing director and senior equity research analyst at Stifel, "If I stay on any of the Meta properties and I'm communicating using Meta, asking questions, and buying — all within the platform — there is no signal loss, and it's easier for Meta to tell the brand its return on advertising spend." The main issue affecting social media companies this year is signal loss.
According to Mark Zuckerberg, CEO of Meta, WhatsApp will be the "next chapter" in the company's history, Jim Cramer of CNBC recently said. He stated that the business's "playbook over time" has been to develop services to cater to a large audience and "expand the monetization" after that objective was attained. "And we've done that with Instagram and Facebook. With corporate texting and commerce being a significant thing there, WhatsApp is truly going to be the next chapter, he said.
This communication from Meta comes at a moment of transition for the business and investor worry. The business just announced a loss on earnings and revenue and predicted dropping sales for a second consecutive quarter. Shares of Meta Platforms have lost about half of their value this year. Mark Zuckerberg is placing substantial bets, now losing money, on a scenario in which the metaverse would serve as a catalyst for the company's future growth. The Meta CEO has emphasised that among the short-term projects to focus on for growth is WhatsApp because his wager on the metaverse could take a decade to materialise.
WhatsApp Business consists of two parts. For small enterprises, there is the WhatsApp Business app. The WhatsApp Business platform, an API, is also available for bigger enterprises like banks, airlines, or e-commerce firms. Every month, the first 1,000 conversations on the platform are free. Following that, businesses are charged based on local rates per discussion, which covers any messages sent during a 24-hour period.
Small businesses can speak with clients directly thanks to the app, which is free. After business hours, for example, they can programme automated messages to provide menu or location information to clients who have contacted them. Businesses can use it to give clients product images, descriptions, and other information they might find interesting. Currently, WhatsApp cannot be used to make payments, but Meta is exploring adding this capability, according to a company representative.
The ability to manage chats across up to 10 devices and new, customisable WhatsApp click-to-chat links will both be available as premium services for small businesses in the upcoming months. These capabilities will help businesses draw clients to their online presence, According to the business' blog.
"We believe that texting in general will be the future of how customers and businesses will want to engage with one another. It's the quickest and simplest approach to do tasks, the representative stated.
Why WhatsApp's effort is focused on Main Street businesses
Analysts are aware of the huge potential. Everyone uses messaging on a regular basis and it is a global forum. Brian Fitzgerald, managing director and senior equities research analyst at Wells Fargo Securities, described it as "huge and increasing."
According to Rob Retzlaff, executive director of The Connected Commerce Council, a non-profit group that encourages small businesses' access to digital technologies and resources, WhatsApp is still "a largely underused resource for small enterprises" in the United States.
Meta anticipates a change in that over time. On the company's second-quarter results call on July 27, chief operating officer Sheryl Sandberg stated, "We are deeply convinced that that habit will continue to spread all around the world." According to the company, 1 billion users message businesses each week via WhatsApp, Messenger, and Instagram.
According to a 2021 research from The Connected Commerce Council, small businesses are in dire need of free and affordable digital solutions. According to the study, if it weren't for digital technologies that kept them operating, roughly 11 million small enterprises would have had to shut down all or a portion of their operations.
Revenue from advertisements is one factor motivating Meta to promote WhatsApp Business. On the second quarter earnings call, Sandberg stated that "Click-to-message is already a multi-billion dollar business for us and we continue to see strong double-digit year-over-year growth." She continued, "Click-to-message is one of our fastest growing ad formats for us." The business does not distinguish between how much of its revenue comes from Messenger and Instagram versus WhatsApp.
According to Stifel's Kelley, businesses prefer this format because it's "an inexpensive method to communicate [with consumers] that feels a little more intimate." Additionally, it resolves a problem brought on by Apple's iOS operating system's privacy modification from a year ago.
Let's take the example of a customer who sees a Facebook advertisement for a shoe store and contacts the company directly through WhatsApp. "There's no leakage here in a world where we're striving to do more and more with less and less data. Everything is secure, according to Fitzgerald. There is a direct business-to-consumer link and nobody else in the world is aware that I purchased these sneakers.
Additionally, Kelley added that by providing premium services, Meta may increase revenue, if only slightly.
Owner of Malhaya in Mexico, José Montoya Gamboa, who has used the free business app for a while, said he intends to pay for the premium version once it becomes available because he loves the flexibility of using it on different devices.
Geraldine Colocia, community manager at Someone Somewhere, a recognised B Corporation that works with a large number of craftspeople throughout Mexico, is unsure. She has used the app's free version for more than two years and would consider upgrading, but the choice would depend on the features and cost, she added.
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