Why Meta and Mark Zuckerberg are betting big on Whatsapp for business

Facebook’s new Meta rebrand logo is seen on a smartphone in front of the Facebook, Messenger, Intagram, Whatsapp and Oculus logos displayed in this illustration image taken on Oct. 28, 2021.

Given Ruvic | Reuters

WhatsApp is already widely popular among American consumers. Now Meta Platforms is focusing more on building its small business base.

Facebook’s parent company launched WhatsApp Business in 2018 with free, simple tools to help small businesses stay in touch with customers, offering a way for them to instantly interact, search for products and show interest in buying.

The company will soon roll out a premium service to small businesses and double down on a newer form of advertising called “click-to-message,” which allows consumers to click on a company’s ad on Facebook or Instagram and directly start a chat with this business on Messenger, Instagram or WhatsApp.

These initiatives offer Meta the ability to increase advertising revenue, remain relevant to small businesses and earn incremental revenue from premium services offered, analysts said.

Holding more within the Meta universe

Meta (then Facebook) bought WhatsApp in October 2014 for around $22 billion. Since then, industry watchers have been watching closely for signs that the company plans to generate more revenue from the platform. That time could now come.

“If I stay on any of the Meta properties and communicate using Meta, ask questions and buy — all within the platform — there’s no signal loss and it’s easier for Meta to tell the brand the performance of their ad spend,” said Mark Kelley, Managing Director and Senior Equity Research Analyst at Stifel “Brand loss is really what is impacting social media companies this year.”

WhatsApp will be the “next chapter” in the company’s history, Meta CEO Mark Zuckerberg recently told CNBC’s Jim Cramer. He noted that the company’s “playbook” over time has been to build services to serve a broad audience and “scale monetization” after that goal is achieved. “And we did that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with business messaging and commerce being a big thing there,” he said.

This message from Meta comes at a time of transition for the company and uncertainty among investors. The company recently reported a loss in profit and revenue and predicted a second straight quarter of declining sales. Meta Platforms shares have lost about half their value this year. Mark Zuckerberg is betting big money, currently at a loss, on a future in which the metaverse will be a growth engine for the company. But with his bet on the metaverse up to a decade away from paying off, Meta’s CEO emphasized that in the short term it is WhatsApp that is among the initiatives that growth should focus on.

WhatsApp Business has two components. There is the WhatsApp Business app for small businesses. There is also the WhatsApp Business platform, an API, for larger businesses such as banks, airlines or e-commerce companies. The first 1,000 conversations on the platform every month are free. After that, businesses are charged per conversation, which includes all messages delivered in a 24-hour session, based on local rates.

With the free app, small businesses can communicate directly with customers. They can set up automated messages to respond to customers after hours, for example, with information about the business, such as a menu or their company location. Businesses can use it to send photos and product descriptions to customers as well as other information that may be of interest to them. Currently, there’s no ability to pay via WhatsApp, but it’s a feature Meta is looking into, a company spokesperson said.

Premium features for small businesses — rolling out in the coming months — will include the ability to manage chats across up to 10 devices, as well as new customizable WhatsApp chat clickable links to help businesses engage customers through their online presence. the company said on its blog.

“We believe messaging in general is the future of how people will want to communicate with businesses and vice versa. It’s the fastest and easiest way to get things done,” the spokesperson said.

Why Main Street businesses are at the heart of WhatsApp’s push

Analysts see broad potential. “Messaging is an international forum that everyone uses on an ongoing basis. It’s huge and growing,” said Brian Fitzgerald, managing director and senior equity research analyst at Wells Fargo Securities.

There is significant room for growth in the US, where WhatsApp is still “a largely untapped resource by small businesses,” said Rob Retzlaff, executive director of The Connected Commerce Council, a nonprofit that promotes small business access. in digital technologies. and tools.

This is something Meta sees changing over time. “We strongly believe that this behavior will continue to grow around the world,” Sheryl Sandberg, the company’s chief operating officer, said on the July 27 second-quarter earnings call. The company estimates that 1 billion users send messages every week on WhatsApp, Messenger and Instagram.

The need for free and low-cost digital tools for small businesses is highlighted by a 2021 report from The Connected Commerce Council. The report noted that approximately 11 million small businesses would have closed all or part of their business if it were not for digital tools that allowed them to continue operating.

One guide for Meta in promoting WhatsApp Business is advertising revenue. “Click-to-message is already a multibillion-dollar business for us, and we continue to see strong double-digit growth year over year,” Sandberg said on the second-quarter earnings call. Click-to-message “is one of the fastest growing forms of advertising for us,” he added. The company does not break down how much of the business comes from WhatsApp versus Messenger or Instagram.

Businesses like this format because it’s “an inexpensive way to interact [with consumers] this is a little more personal,” Stifel’s Kelley said. Additionally, it also mitigates a problem caused by Apple’s privacy change to its iOS operating system last year.

Say, for example, a customer sees a Facebook ad for a sneaker seller and connects directly with the business via WhatsApp. “In a world where we’re trying to do more and more with less and less data, there’s no leakage here. Everything is protected,” Fitzgerald said. “You do [else] People know I bought these sneakers and there’s a direct connection between business and consumer.”

Additionally, by offering high-quality services, Meta could increase revenue, at least incrementally, Kelley said.

José Montoya Gamboa, owner of Malhaya in Mexico, who has been using the free business app for several years, said he plans to pay for the premium version when it becomes available because he likes the ability to use it on multiple devices.

But Geraldine Colocia, community manager at Someone Somewhere, a certified B Corporation that works with hundreds of artisans across Mexico, isn’t so sure. He has been using the free version of the app for more than two years and will consider paying for it, but the decision will affect actual features and pricing, he said.

Leave a Comment

Your email address will not be published.