META Meta Platforms Inc

By Deepa Seetharaman 

Four years after Facebook Inc. bought WhatsApp for $22 billion, it is formally starting the messaging app on a new mission: bringing in revenue.

WhatsApp on Wednesday detailed plans to sell advertisements and charge big companies that use its service to interact with customers, launching its first major revenue streams as growth at Facebook's main app is starting to decelerate.

The measures are aimed at connecting businesses with WhatsApp's user base of roughly 1.5 billion accounts, WhatsApp executives said.

The announcements follow disagreements between Facebook leaders and WhatsApp's co-founders, Jan Koum and Brian Acton, over how to monetize the popular, free service. Mr. Koum and Mr. Acton resisted efforts to put ads in WhatsApp, and over the past year both men have decided to leave Facebook and the messaging app they started in 2009 -- a breakup that was the subject of a Page One article in The Wall Street Journal in June.

Facebook last week said its long-rapid revenue growth is slowing as adding new users becomes more difficult for the 14-year-old company, sending its stock price tumbling nearly 20% in two days before it recovered slightly this week. To compensate, Facebook is relying more on its acquisitions, including photo-sharing app Instagram, to help drive growth.

WhatsApp users exchange an average of 60 billion messages a day, but only a fraction are between companies and consumers -- in part because the system isn't designed to facilitate that kind of interaction, executives said.

"Right now, there's really no way to know if a business is reachable on WhatsApp," Matt Idema, WhatsApp's chief operating officer, said in an interview.

The company will introduce new ad types to let users know they can text companies directly via WhatsApp for any customer-service queries instead of calling. WhatsApp will charge companies between a half a penny and 9 cents -- depending on the country -- for every message delivered to a potential customer, a spokesman said.

About 100 companies have been testing the feature, including Singapore Airlines Ltd., e-commerce company Wish and ride-sharing company Uber Technologies Inc., WhatsApp said.

Uber said it has been using WhatsApp to answer drivers' questions in Mexico, India and Brazil.

The messages between people and business will be encrypted and unreadable by WhatsApp, but the companies could potentially store those messages in a decrypted state, creating a pool of potentially useful data for those clients.

WhatsApp also will start showing ads in its popular Status feature next year, following a path carved out by Instagram, company officials told the Journal.

Status allows users to post montages of text, photos and video that appear for 24 hours -- similar to an Instagram tool called Stories. About 450 million people use WhatsApp Status, compared with about 400 million who use Instagram Stories, which already shows ads.

Like with Stories, the ads in Status will be powered by Facebook's advertising system. Mr. Idema said these types of ads would help familiarize users with business on WhatsApp. "We've seen it working well on Instagram and so we're learning a lot from that," he said.

Users will be able to choose whether to opt into receiving messages from businesses. WhatsApp executives believe users will adapt to the new tools, a spokesman said, adding that the company has seen positive feedback from ads in Instagram Stories.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

August 01, 2018 16:10 ET (20:10 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.