Have you ever realized or asked anyone a question like How does WhatsApp make money? It yes, then you would get the perfect answer with complete details right from their beginning to this year 2020. Let’s get into it guys!
WhatsApp was founded by Jan Koum and Brian Acton and it was born in January 2009 as a status update application. Further, it was updated to WhatsApp 2.0 that converted into an Instant Messaging Application. Now, the real journey begins. The application of Whatsapp is free of cost and available for all devices like iPhone, Android, and Desktop.
As it was a free application for all users then you can ask how it does make money and what’s the revenue model of WhatsApp? Jump into the below section and get complete clarification on How Whatsapp makes money?
In 2014, Facebook acquired WhatsApp for $19 Billion, and at that time WhatsApp had 450 million monthly active users globally. In February 2020, Facebook-owned WA Application providing services to more than 2 Billion active users across the world and was Facebook’s second-biggest property after the messenger and Instagram apps. So, let’s quickly dive into today’s topic how is WhatsApp making its money?
- How does WhatsApp Make Money?
- WhatsApp’s Revenue Model
- Future Revenue Generation Strategies
Whatsapp doesn’t generate revenue via ads, unlike other applications. Developers of WhatsApp dislike advertisements so they have introduced the ad-free application names WhatsApp. It only focuses on user-friendly experience and interface.
Whatsapp creator’s main goal is to provide an instant messaging app for the android, iPhone, and web users not for the business people to place advertisements & attract customers. Simultaneously, WhatsApp should pay their bills too if they allow ads. That’s why the WhatsApp team decided to come up with the paid version of the application so that people can generate revenue via ads. Whatsapp charges an annual fee of $1 from the users for the WhatsApp paid version.
Whatsapp’s first revenue generation strategy has like this, it’s initial funding of $250k by five ex-Yahoo! friends who were awarded as a co-founder status. Next and the third funding in Whatsapp was brought by Sequoia Captial with a total investment of amount $60 million.
By this funding, WhatsApp company employers get the income at the initial stages. And the reason behind waved off the subscription fee is not getting much expenditure. So, they have started WhatsApp paid version for $1 subscription fees.
The primary strategy of the creators was to achieve the brand position as an instant messaging application. This will make them increase their capitalization on the network effect. And finally, the strategy to create a network first and revenue next worked effectively.
As a result, after two years Facebook’s CEO Mark Zuckerberg owned the WhatsApp for $19 billion and all the staff of WhatsApp was appointed as Facebook payrolls including Koum, creator of Whatsapp.
After acquiring the Whatsapp in 2014, facebook opened new doors for the application. Also, the answer to ‘how does WhatsApp make money?’ altered after the acquisition. However, they have introduced some really good strategic plans for WhatsApp’s revenue model for 2020.
WhatsApp makes money via two sources, the first one is WhatsApp for Business API and the second one is WhatsApp Ads.
After acquiring, the Facebook company decided to change the revenue model by launching the new Whatsapp Business application. It allows users to build their business profile and become a verified business in WhatsApp.
Also, WhatsApp business verified people can add their links to their website or Facebook page. Other features like setting up autoresponders, connect their landline number with WhatsApp, integrate the WhatsApp for business API by their product offering.
Currently. Whatsapp Business application is free to download and use for all businesses. However, WhatsApp will make money via WhatsApp for Business API.
Whatsapp API permits the businesses to integrate Whatsapp for Business with their systems to engage with customers via notifications and handle their questions automatically.
However, there is a restriction to send messages and to prevent ad spam. Businesses can only send replies or messages to people who have approached them first, but the API will support businesses technically send appointment remainders, confirmations for shippings, or event tickets to their customers.
Some of the clients like Booking.com, Wish, etc. have already working with the company successfully. At this stage, you will get a question in your mind that how does WhatsApp make money through API?
Well, here comes your answer. WhatsApp has planned a really strategic revenue generation plan for this product like charging some amount of money from businesses for slow replies.
It means the businesses need to send replies to their customers within 24 hours for free. After 24 hrs, they have to pay a fee for every sent message. These charges may vary from one country to another countries. For better and fast messages you can even make use of their own tool or apps like MessageBird, Zendesk, or Twilio.
However, you have to take any other number which is not associated with the WhatsApp earlier to use the API. A new mobile or landline number should be used to install the API.
These days digital transaction is becoming new normal in everyone’s life. In payment applications, there is a huge competition. All banks and other third-party applications are using the digital transaction option for easy payments to the users. That’s the reason, WhatsApp also focused on introducing the payment option.
After development, WhatsApp has created a new payment option (P2P payments) in Whatsapp for Indian users to improve the market and perform money transactions easily to their contacts like Venmo in the USA. This feature benefits business people in the future. Also, WhatsApp Payments feature open gates to many businesses that rely on the platform and capitalize on the network effect.
Going ahead, WhatsApp plans a strategy to further monetize the application by improving the development of the WhatsApp Payment feature and by introducing ads in the status section.
Now, WhatsApp is going to copy the Snapchat revenue-earning strategies in the future. As per the economic times, the company is also having plans to let businesses utilize the status feature and advertise their brand in text, photos, videos, and animated gifs for 24 hrs. This can help WhatsApp business users to promote their businesses in a perfect way.
We think the above shed information has given the answer to your question, “How does WhatsApp make money?” and what’s the revenue model for 2020? If yes, please share our article with your friends or on social media handles. Do you feel we missed anything most important regarding the WhatsApp revenue model? please tell us in the below comment section.
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