In today’s article, I am going to tell you about How Does WhatsApp Make Money? so if you want to know about it, then keep reading this article. Because I am going to give you complete information about it, so let’s start.
There are a lot of applications available throughout the marketplace. Each has its own source of making money. Some make money through ad monetization, while others charge fees, such as for content subscriptions.
There are numerous methods for making a lot of money. Are you still unaware of it? No worries, we have the solution. Follow the below-interlinked pages.
Coming back to today’s topic, have you ever thought about applications that are absolutely free, display no ads, and have no premium subscriptions—how do they manage to make money?
Now you’ll see what rubbish I’m talking about – why would a developer make such an app if he/she couldn’t earn?
You must have heard of WhatsApp and may have used it for a long time.
WhatsApp satisfies all the requirements mentioned above. It currently has no advertisements or premium subscriptions. But wait for a second, how does WhatsApp make money?
Well, this question would have struck your mind many times. Didn’t come across any Sureshot answers?
Don’t worry, we have got the key to “How does WhatsApp make money?” What you need to do is to follow the article till the end!
This article will tell you everything you need to know about how WhatsApp makes money, how it got started, what its current revenue is, and how it earns billions of dollars.
Let’s get the details!
Notable points:
- A mobile application called WhatsApp enables users to text and contact one another via the Internet.
- In 2014, Meta (previously Facebook) paid $19 billion to acquire WhatsApp, which had been created in 2009.
- Behind its Instagram and Facebook Messenger acquisitions, WhatsApp is currently Meta’s third-largest asset.
- WhatsApp used to rely on a subscription-based business model to generate revenue. The initial download charge was $1, and thereafter, annual fees were $1.
- With the hope that customers would communicate with businesses through it and that companies would cover the cost, Meta eventually eliminated the $1 fee and made WhatsApp a free service.
- WhatsApp generated $86.15 billion in revenue as of 2021.
Table of Contents
General Information About WhatsApp
Brian Acton and Jan Koum are the creators of WhatsApp, who developed and launched it in 2009. Whatsapp is a free and secure texting application that connects users from across the globe. Its current headquarters are in Menlo Park, California, with its parent company Facebook (FB)/Meta Platforms Inc.
Facebook purchased Whatsapp in 2014, following Instagram and Facebook Messenger as its two most important subsidiaries.
WhatsApp doesn’t conduct its own business. But yeah, it is a powerful messaging app. Users can exchange photographs, documents, and voice and video chats while also sharing their location and sending text and voice messages. In essence, WhatsApp offers everything a user may possibly need to interact with someone else. The platform is most popular among users because it is free, has no advertisements, and provides end-to-end encryption.
Whatsapp’s Branding and Expansion Plan
How did WhatsApp achieve its present level of popularity? And can you use their marketing strategies for your own company? Whatsapp was created.
With the end user in mind, Every feature of the application satisfies a user’s demand.
It works smoothly with phone numbers that resemble standard textual messages.
Multimedia messaging is one of the extra services it offers, which would be quite expensive to send over standard MMS.
Additionally, users were obliged to invite more of their family and friends to use this “SMS replacement” program, which had a genuine viral effect.
WhatsApp Business Strategy
WhatsApp’s main offering is an effective personal messaging service. Its method of making money differs slightly from that of many competitors in the market. Initially, WhatsApp followed a freemium plan allowing users to message for free but it lasted till one year after which users had to pay $0.99 per year to continue using it.
However, now this plan has been discontinued. Instead, they profit from WhatsApp Pay and WhatsApp for Business—details of which are listed later on in this article.
Each business has rivals, and WhatsApp is not an exception. Some of its rivals and a bit about their model are listed below:
- LINE has a source of revenue from its in-game purchases and paid stickers.
- Kakao makes money off of advertising.
- Kik compensates users for watching ads.
- Skype levies a subscription charge for international calls.
How Does WhatsApp Make Money:
WhatsApp does not rely on advertisements for its existence or for any kind of revenue. But why aren’t ads displayed on WhatsApp? Read below:
The creators of WhatsApp, Jan Koum and Brian Acton, disliked advertisements, so they built an ad-free platform with a single focus on a wonderful user interface and a smooth messaging experience.
Their only motive or they intended to build WhatsApp for people and not for large corporations to advertise their brands.
They had to pay their bills at the same time, though. Therefore, they made the decision to create a subscription edition of WhatsApp for which they charged customers a $1 yearly subscription.
Many of you will wonder when this happened. We never saw any such subscription on WhatsApp. Read below; you’ll find every bit of detail.
Initial Revenue Generation Strategy
Five former Yahoo! pals who were given co-founder status contributed $250k to WhatsApp’s initial round of investment.
Sequoia Capital led the second and third rounds of investment, contributing a total of $60 million — $8 million in 2011 and $52 million in 2013, to WhatsApp Inc. The 50 employees of WhatsApp have no other source of income. Running the program didn’t need a lot of money; the main expense was mailing users a verification number.
Due to this, WhatsApp waived the $0.99 monthly membership fee.
The approach of building a network first and saving money later was successful. How did they achieve this? The creators established the brand as being synonymous with an instant messaging program. They have to make use of the network effect for this.
Following Mark Zuckerberg’s two-year courtship, WhatsApp was purchased by Facebook in February 2014 for $19 billion. All of the workers, including Koum, who is now a member of Facebook’s board, were hired by Facebook.
To a great extent, its revenue increased after Mark Zuckerberg owned WhatsApp. This changed the entire revenue model of the WhatsApp business and so the answer to the question ‘how does WhatsApp make money?’ varied. This calls for the new revenue model of WhatsApp mentioned below.
WhatsApp’s Revenue Model (Facebook’s Strategy)
In 2014, Facebook paid $19 billion to purchase WhatsApp, which gave the app numerous additional opportunities.
Facebook unveiled some pretty significant intentions for WhatsApp’s business strategy after the purchase.
1. WhatsApp Business
There were new WhatsApp plans from Facebook.
The business launched the WhatsApp Business version, which enables customers to build their business accounts and obtain WhatsApp authentication. The verified companies may set up autoresponders, connect their landlines to WhatsApp, and create a corporate profile with a few important links to their website.
This can redirect visitors to their Facebook page. In addition, the business API can integrate the WhatsApp for Business API with their product offering and even connect their landlines to WhatsApp. As of now, Whatsapp Business is used by major brands like Uber, Ola, and Netflix.
For all enterprises, downloading and using the WhatsApp Business app is presently free.
Now, WhatsApp earns money via the WhatsApp for Business API.
2. WhatsApp for Business Business API
By releasing the WhatsApp Business API, the firm expanded the capabilities of its business division. Businesses may now connect WhatsApp for Business with their systems to automatically respond to customer inquiries and reach out to clients via alerts by using the WhatsApp API.
Whatsapp restricted Businesses from sending messages. This was done to prevent spam and advertisements. Businesses can only send messages to people who have contacted them first, but the API will also help them programmatically send shipping confirmations, appointment reminders, or event bills to their customers.
For this offering, WhatsApp has created an extremely smart strategy for generating income. What was this strategy? Read below:
Businesses will be able to react to user messages for free. However, they are billed for delayed responses. This implies they have to pay a price to WhatsApp for each message sent after a period of 24 hours. Until then, although the fee is set, it varies depending on the country.
Businesses may also opt to manually respond using their own software or any third-party applications.
The charges levied by Business are based on the number of messages. The below-mentioned points entail the same:
- $0.0085/text for the first 250,000 texts.
- $0.0083/text for the next 750,000 texts.
- The next 2 million texts will cost $0.0080 per text.
- $0.0073/text for the next 3 million texts
- $0.0065/text for the next 4 million texts.
- Over ten million texts$0.0058/text
This simply implies that the charges get reduced with an increased number of messages.
3. Payment Gateway for Whatsapp
This will help WhatsApp’s business in its largest market even more. To further strengthen its position in the industry and establish itself as a favored app for sending money, WhatsApp has included a payment option just like any other existing integrated UPI program.
The Whatsapp payment gateway features are much like PayPal. The receiving party charges a fee of 3.99% per transaction.
Mark Zuckerberg recently discussed his future intentions with WhatsApp, including the publicizing of the global rollout of the WhatsApp payments function. This will allow for the leveraging of the network effect by many more firms dependent on the platform.
4. Indirect Revenue from ‘Click to WhatsApp ads’
You may have seen the ‘Click to WhatsApp’ icons/buttons on Facebook—that’s what the other sources of revenue are through which WhatsApp earns.
In addition to WhatsApp For Business and WhatsApp Pay, WhatsApp also generates revenue via Click WhatsApp advertisements. These are not ads displayed on WhatsApp but rather on Facebook and lead people to WhatsApp.
However, the revenue generated by this is partially credited to WhatsApp, as it isn’t directly displayed on it. But yeah, Facebook does use WhatsApp in this way to raise revenue.
How much money does WhatsApp make?
Facebook is the only firm that is aware of the precise amount of money that WhatsApp brings. This usually happens because the parent corporation doesn’t disclose the revenue split of the many owned companies.
WhatsApp reportedly made a pitiful $1.28 million in income, but that’s a long way from when WhatsApp used to charge $1 to its users.
In a report from January 2016, Forbes forecasted that by 2020, WhatsApp’s average income per user would be $4, generating revenue of almost $5 billion for Facebook. The forecasts, however, were incorrect. This happened as they projected WhatsApp would have 1.3 billion monthly users by 2020, but this was attained by the middle of 2017.
Forbes revised their revenue projections for WhatsApp in November 2017. They increased the range to $5 billion to $15 billion, with an average income per user of $4 to $12.
So, as of 2022, Whatsapp’s revenue can be anticipated to be more than $95 billion, looking at its existing and current user growth. However, this anticipation might vary with the rate and other contributing factors.
But is it really all about the money?
Industry officials have hypothesized that one of the reasons Meta bought WhatsApp was because it could obtain users’ psychological and personal data.
Meta has access to location-sharing data. In addition, it has accessibility to users’ complete contact lists and over 100 billion messages sent daily. All of this personal data is uploaded to and stored on Meta’s servers.
Despite Mark Zuckerberg’s prior assurances, unless the user adjusts the settings to not share data with Meta, this data will be leveraged to enhance consumer targeting in Meta advertisements.
How did Whatsapp’s end-to-end encryption come into existence?
After it was discovered that extremists used applications to communicate before and during attacks, governments all over the world have been furious with WhatsApp and other messaging services.
Governments and anti-terrorism organizations asked the developers of these apps to divulge the encryption key so they could read the messages that terrorists sent and received. The businesses, however, declined to comply. Due to this, WhatsApp adopted end-to-end encryption, which ensures that only the sender and recipient can access the data sent over the app, not even WhatsApp itself.
Conclusion:)
The main motive of businesses is to make money, some of them publicize their revenue sources while others keep them a secret. WhatsApp is the other one. Of Course, it generates a lot of revenue via different sources and methods. The article entails some of the known revenue methods WhatsApp has implied since its existence.
Read also:)
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- Difference Between WhatsApp and WhatsApp Business: Full Guide!
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