Facebook Tees Up WhatsApp to Make Money
September 05 2017 - 7:29AM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. is getting ready to earn back some of the $22
billion it spent to buy the messaging service WhatsApp three years
ago.
WhatsApp will eventually charge companies to use some future
features in the two free business tools it started testing this
summer, WhatsApp's chief operating officer, Matt Idema, said in an
interview.
The new tools, which help businesses from local bakeries to
global airlines talk to customers over the app, reflect a different
approach to monetization than other Facebook products, which rely
on advertising.
"We want to put a basic foundation in place to allow people to
message businesses and for them to get the responses that they
want," Mr. Idema said. "We do intend on charging businesses in the
future."
The free WhatsApp Business app allows small businesses to field
customer questions or send them updates. Larger companies can do
the same with another free tool that lets them plug directly into
the WhatsApp platform. WhatsApp is also rolling out verified
profiles for businesses so its one billion daily users can
distinguish between a person and a business.
Companies in Brazil, Europe, India and Indonesia are testing the
free services, including KLM Royal Dutch Airlines. Users must "opt
in" to be contacted by a business, a WhatsApp spokeswoman said.
Mr. Idema declined to describe the paid features or say when
they would make their debut. "We don't have the details of
monetization figured out, " he said.
The business tools being tested, expected to be detailed in a
blog post Tuesday, are another sign of Facebook's intention to cash
in on messaging as it grapples with a slowdown in revenue growth
from its core service, news feed.
Facebook owns two of the world's most popular messaging apps,
WhatsApp and Facebook Messenger, and Chief Executive Mark
Zuckerberg predicts that messaging could yield dividends for the
company within five years.
In July, Facebook started showing advertisements inside
Messenger, sandwiched between users' conversations when they open
the app. The strategy is similar to how Facebook monetizes the news
feed and Instagram, the photo- and video-sharing app it bought for
$1 billion in 2012.
Mr. Idema didn't rule out that WhatsApp could show ads to users
at some point but said the focus was now on connecting businesses
and users. Last year, WhatsApp started sharing its user data with
Facebook, a step to improve Facebook's ad targeting and friend
suggestions.
Regions where WhatsApp is popular haven't been as lucrative for
Facebook's advertising business. In the second quarter, Facebook
generated $19.38 per user in the U.S. and Canada but only $2.13 per
user in Asia. India is WhatsApp's largest market, with 200 million
monthly active users out of 1.3 billion globally.
One business taking part in WhatsApp's commercial project is
Gurgaon, India, health-care startup 1mg, which sells prescription
medications online. The company began working with WhatsApp to talk
to users after they have submitted orders, co-founder Gaurav
Agarwal said.
If an order sent to 1mg lacks necessary details, like
documentation of a prescription, 1mg staff can send customers a
message via WhatsApp's tool for larger companies, asking them to
provide an image of the document. Chats from the company appear on
customers' phones as coming from WhatsApp verified users.
"It's much easier than through SMS or our app," said Mr.
Agarwal, referring to sending text messages or alerts. He said
1mg's fulfillment rate for such orders has nearly doubled since
implementing the pilot.
--Newley Purnell contributed to this article.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
September 05, 2017 07:14 ET (11:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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