how-does-whatsapp-make-money

How Does WhatsApp Make Money-Case Study

How does WhatsApp make money?

Don’t need an introduction to the most popular chat application on the internet.

Yes, it’s WhatsApp.

It’s simple to use a messaging application where you can stay connected with your loved ones.

WhatsApp was started back in 2009 by Brian Acton and Jan Koum ex-yahoo team member.

They left the company in 2007 and applied on Facebook but were rejected it.

Just after the creation of the platform, it gained huge popularity in just a few months.

WhatsApp has now over 1.5 billion active users and constantly increasing day after day.

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Statistic: Number of daily active WhatsApp Status users from 1st quarter 2017 to 1st quarter 2019 (in millions) | Statista
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Using WhatsApp is pretty easy, all you need to a smartphone, download the application, and register your account with your contact number and that’s it.

Now you can share messages, media files, and documents.

WhatsApp is not only a text message-sharing application now you can even do a lot more things on the platform.

Initially, when the platform was started, it was just a status-sharing application where people could share their text-based status on their account but later it changed to a message-sharing application where now you’re watching the real WhatsApp.

As expected you’re using WhatsApp and you are aware of the platform.

You can see that WhatsApp doesn’t charge its users even a single penny, so from where is the platform generating the revenue?

You can see there are not any ads on the platform so where WhatsApp generates revenue for their team member.

Here is the case study. We will divide this session into two parts the first one will explain before acquired by Facebook and the second will explain after acquired by Facebook.

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Before being acquired by Facebook:

WhatsApp was acquired by Facebook back in 2014.

The platform was first created in 2009 as a simple status-sharing application.

Developers want a platform where people can stay connected with each other but the problem is how to generate revenue for running their expenses.

As you can see WhatsApp is ads-free and even they don’t charge a single penny.

The big question was how to manage the basic expenses. WhatsApp started charging $1 for a year in its initial state.

After that, they get some money for their expenses. Their basic expenses were about managing the data, server cost, sending the verification messages, etc.

WhatsApp got its first round of funding was $250K from five ex-yahoo.

After that, the second and the third funding by Sequoia Venture invested a total of 60 million dollars (8 million in 2011 and 52 million in 2013).

This was the revenue generated at the initial stages of running the 50 staff employees. Later after a year, Facebook bought WhatsApp in February 2014.

Now all the employees come into the Facebook payroll and WhatsApp is completely under Facebook Inc.

Now a small company acquired by a big giant. The complete rights of WhatsApp shifted to Facebook.

Now, Facebook uses the platform for user data generation, and Facebook monitors the behavior of users, According to their behavior Facebook shows ads to the users.

The user-generated data ultimately helps Facebook inc to get more and more profit.

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After being acquired by Facebook:

WhatsApp for Business:

Have you heard about WhatsApp for business applications?

Yes, you can freely download the application from PlayStore and AppStore. It’s free and easy to use.

You can easily download the application. You just need to create an account on the platform.

Creating an account is easy.  You can list your business with WhatsApp business. Also, there is one more option called the WhatsApp API.

whatsapp-api-model

You can use this feature if you already have a website or application.

You can integrate the WhatsApp API on your platform and you can directly interact with your users or customers.

You can mention your product catalog on WhatsApp for Business Applications.

WhatsApp for business charges for API model:

Yes! If you try to figure out the platforms like MakeMyTrip, Wish, Booking.com, UrbanClap, etc..

These are the popular brands already implementing the API model on their platform.

You can directly chat with them on WhatsApp.

You can ask them about their services and your orders and bookings etc.

WhatsApp charges for its API service.

You can use WhatsApp for business free of cost for small businesses but if you want to scale it to larger then you need to consider the paid plan and need to use its API model.

WhatsApp payment model:

Do you know WhatsApp introduced the latest payment feature in India?

Yes, if you’re using the latest version then you must need to have the UPI payment transfer.

whatsapp-upi-payment-model

With the UPI payment transfer model, you can transfer the funds to your friends and family.

It’s basically a P2P model where you can easily transfer the funds to your friends and wherever you want.

Using the feature is pretty easy, you first need to connect your bank account to WhatsApp, and then it’ll allow you to transfer money from one person to another.

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End-to-End Encryption System:

As all of you may be aware the end-to-end encryption of messaging platforms like WhatsApp.

You know about this feature that no other sender and receiver won’t be able to read the messages including WhatsApp.

end-to-end-encryption-model-by-whatsapp

WhatsApp and other message applications use this feature not to show any interference between the sender and receiver.

You need to manually enable the feature from your WhatsApp application settings.

To enable this you need to visit the WhatsApp settings.

As the Facebook CEO already promised in it’s one of the conferences they won’t use the WhatsApp platform for gathering and using the data for showcasing the ads to the users until the users themselves are allowed to do so.

Now it’s your turn:

As I already told WhatsApp is completely free instead of that it needs to generate revenue so WhatsApp and its parent organization read your conversation and sell your behavior to the companies.

Let’s understand it by taking an example.

Suppose, you need a cheap flight ticket.

How you’ll look for it, obviously you’ll type on Google first, and then you’ll visit several other websites you are already aware of.

If you will not find any decent one then you may ask your friend using WhatsApp, and discuss with your friends and family about the cheapest flight ticket.

After a few hours, you’ll see the ads showing on your social media like Facebook and its subsidiary companies like Instagram the cheap flight tickets.

What does it mean? It means Facebook knows what you want right now and what you’re looking for.

It will make a simple behavior of your searches and it creates a pattern that is later used by Facebook and sells to the companies to show you the exact target ads on their platform.

Concluding:

After concluding the session I can say that WhatsApp is really worth purchasing at $19B.

Believe it or not, Facebook doubled and tripled its revenue just because of one simple chat application.

It’s not about WhatsApp it’s about Facebook because now WhatsApp is an integral part of the Facebook family.

Hope you enjoyed the article, Make sure to give your valuable response below.

If you have any questions or suggestions make sure to mention them in the comments below.

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