Facebook’s New Strategy for WhatsApp

New Tools for Businesses Using WhatsApp

WhatsApp, the messaging app purchased by Facebook (FB) in 2014, offers its services to more than 2 billion users around the world for free. Now, after years of exploring various possibilities, the company has a new plan for how to make WhatsApp profitable.

WhatsApp is already used by businesses globally for marketing and communication with customers. The app will soon give these businesses tools for storing, analyzing, and managing messages with customers.

Currently, many businesses already do this through outside services, but now they will be able to do this tracking and strategizing through WhatsApp. Eventually the new WhatsApp will also include ways for customers to shop on the platform.

Shifting Away from Targeted Ads

Facebook’s plan for monetizing WhatsApp differs from the business model it has used to make money from its flagship social media platform. The company’s strategy for Facebook and Instagram centers around targeted ads. With WhatsApp, the social media conglomerate wants to focus on building tools for customer service and user-initiated shopping.

Because WhatsApp’s user base is so enormous, Facebook could charge fractions of pennies for each time businesses interact with customers on the platform. Those charges could add up and make the app highly profitable. Already, about 50 million businesses use WhatsApp, and 175 million people message these businesses each day. With WhatsApp’s new offerings, these user numbers could see growth.

Monetizing WhatsApp

Earlier this year, Facebook abandoned plans to try to sell targeted ads on WhatsApp. The messaging platform was created without the data collection and targeting features built into Facebook’s main social media channels, and Facebook was met with pushback as it thought about incorporating these features into WhatsApp.

Facebook acquired WhatsApp for $22 billion six years ago. Initially the purchase price was $16 billion, $12 billion of which was in stock. After agreeing to pay $3.6 billion in compensation to WhatsApp employees for staying on board at Facebook, the price bumped up to $19.6 billion. Then, by the time the acquisition passed through the regulatory process, Facebook’s shares had surged even more, adding another $1.7 billion to the final price tag. Since then, WhatsApp has not yet paid financial dividends, but Facebook hopes this new strategy will change that.

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