WhatsApp Ads: Not New, But Drastically Different

Many people are surprised to learn that I don’t use WhatsApp. Their surprise is understandable, since WhatsApp is the most popular instant messaging app in Indonesia. The 2017 Mobile Instant Messaging Survey conducted by Daily Social among 1,022 respondents showed that 97.24% of respondents admitted to having used WhatsApp, and 61.81% said that WhatsApp is the app they use most often. As of January 2017, there were 35.8 million WhatsApp users in Indonesia.

Globally, WhatsApp is also the most popular instant messaging app with over 1.5 billion users, surpassing Facebook Messenger, WeChat, Line, and Telegram. Although I prefer using Line for my daily chats, I eventually had to install WhatsApp due to work requirements. First introduced in 2009 by Brian Acton and Jan Koum, WhatsApp became a revolutionary app. The two former Yahoo! employees created a platform where text messages, multimedia, and even voice and video calls could be made for free. One of WhatsApp’s key strengths that makes it increasingly popular is the absence of intrusive ads. In a June 2012 blog post titled “Why We Don’t Sell Ads,” archived on WhatsApp’s official blog, the two founders committed to never selling their users’ personal data to advertisers. WhatsApp uses end-to-end encryption as part of its commitment to user privacy and digital security.

“At WhatsApp, our engineers spend all their time fixing bugs, adding new features, and ironing out all the little intricacies in our mission to bring rich, affordable, and reliable messaging to every phone in the world. That’s our product, and that’s our passion. Your data isn’t even part of the picture. We simply aren’t interested in any of it.” – Jan Koum

A Turning Point for WhatsApp

WhatsApp underwent a significant business transformation after being acquired by Facebook for $22 billion in February 2014. With an extraordinarily large and loyal user base, Facebook aims to monetize WhatsApp. Facebook’s serious move was marked by the launch of the WhatsApp Business API, which targets medium and large business owners. This service can be used to provide real-time customer service to customers. The cost to business owners is approximately half a cent to nine cents per message. These fees may vary by country.

Currently, 100 companies have tested this customer service feature, including Singapore Airlines and Uber. In Indonesia, Bank BRI and Sale Stock have already adopted the WhatsApp Business API. Bank BRI has been piloting a chatbot dubbed SaBRIna (Smart BRI New Assistant) since April 2018. In addition to handling customer complaints via WhatsApp, customers can also access information on BRI products, maps showing branch and ATM locations, and the nearest locations to top up Brizzi. This 24-hour customer service via the SaBRIna chatbot is considered more efficient for answering simple questions compared to phone calls or emails.

WhatsApp’s newly announced monetization strategy involves incorporating ads into Status. This feature, similar to Snapchat or Instagram Stories, allows users to share photos, videos, or text that automatically disappear after 24 hours. WhatsApp Vice President Chris Daniels announced that these Status ads will become the company’s primary source of revenue. WhatsApp is currently conducting a limited trial of ads in Status through WhatsApp beta version 2.18.305 on Android. WhatsApp users are expected to start seeing these Status ads as early as 2019.

Taking a Cue from Instagram

WhatsApp’s monetization method isn’t entirely new. Ads in the Status feature are similar to the monetization method Instagram has already implemented in its Stories feature. Stories ads can be targeted to increase reach, brand awareness, traffic, video views, app installs, conversions, and lead generation. Equipped with a “Swipe Up” feature linked to a hyperlink, users can be directed to a promotional page immediately. Short videos under fifteen seconds have become the preferred Stories format because they are nine times more effective at driving post-click website visits than static images alone. A survey conducted by Instagram found that 52% of Instagram users in Indonesia admitted they were more interested in a brand or product after seeing it on Instagram Stories.

However, Facebook COO Sheryl Sandberg noted that WhatsApp’s Status feature reaches more than 450 million users daily, surpassing the daily user count for Instagram Stories.

In addition, Instagram also recently launched a shopping feature in September 2018 in forty-six countries. This feature is designed to make it easier to purchase products featured by brands or influencers. Users can tap on products displayed in Feed posts or Stories to see the names and prices of the products on offer. Equipped with links to purchase pages, users can acquire these products in no time. Instagram is currently testing the shopping feature on its Explore page as well.

WhatsApp and Instagram continue to see growing user bases, while Facebook, Twitter, and Snapchat have reportedly faced slowing or even declining user growth over the past three months. This significant slowdown in user growth across several social media platforms is referred to as the “Peak Social” phenomenon. It can be said that WhatsApp has great potential to compete with Instagram. However, WhatsApp may need to take a cue from the various monetization strategies Instagram has implemented if it is serious about pursuing monetization.

What It Costs

WhatsApp’s shift in business strategy has not gone entirely smoothly. Two of WhatsApp’s founders stepped down because they disagreed with Facebook’s decision to monetize WhatsApp.

Brian Acton resigned in September 2017, citing his desire “to start a new foundation,” as he announced on his Facebook account. A year later, Forbes published an exclusive interview with Brian Acton regarding his main reason for leaving WhatsApp. He admitted to facing significant pressure from Mark Zuckerberg and Sheryl Sandberg to monetize WhatsApp. They questioned WhatsApp’s encryption methods in order to introduce ads and commercial messaging. Acton’s frustration with Facebook appeared to reach a peak in March 2018 when he tweeted “It’s time to #deletefacebook” from his personal Twitter account.

Jan Koum followed Brian Acton’s lead in April 2018. On his Facebook account, Koum announced that he wanted to spend his time “collecting rare air-cooled Porsches, working on my cars, and playing ultimate frisbee.” The main reason for Koum’s resignation, however, was his opposition to Facebook’s plans to compromise WhatsApp users’ privacy. Given that Koum and Acton’s main motto was “No ads, no games, no gimmicks,” when Facebook first acquired WhatsApp, the two had promised that user data would remain safe from advertisers. However, the two sides ultimately reached an impasse. WhatsApp will begin implementing new monetization strategies to maximize the potential of its massive user base.

“To Acton, invoking this clause seemed simple. The Facebook-WhatsApp pairing had been a head-scratcher from the start. Facebook has one of the world’s biggest advertising networks; Koum and Acton hated ads. Facebook’s added value for advertisers lies in how much it knows about its users; WhatsApp’s founders were privacy zealots who believed their vaunted encryption had been integral to their nearly unprecedented global growth.” – Forbes