Most of our dear social media services belong to one single company, Facebook. Facebook owns its “blue” platform, Facebook, the picture app it bought for $1 billion in 2012, Instagram, and its more recent $19 billion acquisition: WhatsApp, bought in 2014. However, these social media services differ in one fundamental thing—while Instagram and Facebook present ads, WhatsApp still has none. Users are enjoying for free this personal service messaging app without being subject to advertisements. Except this is about to change.
The private messaging platform WhatsApp has more than 1.6 billion users worldwide in 2019, and the numbers are increasing. As of now, it has more users than Facebook Messenger, 1.3 billion, or the Chinese service WeChat, 1 billion (read Will WhatsApp save Facebook?). According to a report by eMarketer, most of those 1.6 billion individuals that use the WhatsApp service are in India, Brazil, and the US, which are WhatApp’s largest markets. However, the service has the highest user penetration rate among smartphones in Argentina and India, where 90% use WhatsApp in 2019. And again, the point is that they all do it for free. They can chat with their friends and family, create groups on the app, send messages to a wide array of people, and, more recently, post stories through the service similarly to Instagram and Facebook. However, Facebook, whose market capitalization is worth $450 billion, is not a not for profit agency, and it’s about to start making money off WhatsApp.
Most of Facebook’s revenue—98% in 2018 to be exact—comes from a single stream: advertising. To put it in context, in 2018, the company earned $55 billion in advertising dollars, while a company like CBS earned around $7 billion. The ads come in many forms: self-serve advertising ads, paid by individuals who want to promote their content, targeted advertising used by large companies, Facebook Messenger ads, which come up between personal messages, and video ads. Formats vary. For example, most ads on Instagram are short videos featured through the Stories’ functionality of the application.
When in 2016, Instagram launched its Stories, basically to compete with Snapchat, advertising was not immediately installed. It took some time for users to get used to the stories’ immediacy before the company started rolling them out. But the success was instantaneous. Just in the last quarter of 2018, ads on Instagram stories reached a total of 500 million users. Now, on Instagram, advertisers can push their products through the Stories feature or regular posts, and they can even link their pictures to their stores so users can directly buy online. Facebook has definitely milked this cow.
Soon it will be WhatsApp’s turn. Instagram is indeed an open platform designed to interact with friends as well as with brands, leaders, and influencers. A majority of Instagram users, 66%, believe the platform is a place to interact with brands, says a 2019 report. The experience they have on Instagram is public, similar to Twitter. WhatsApp is different. Consumers use the service to talk with people they already know and have their personal phone numbers. Video ads, or any advertising content, could seem more intrusive than on Instagram or Facebook. That’s an argument, but in reality, that’s just a matter of habit.
When WhatsApp rolled out its Status feature, its own version of Instagram Stories, the platform already broke the private messaging scheme. Suddenly, WhatsApp was not only meant for one-on-one communication or targeted messages for groups. The Status feature allowed users to share their content with everyone. Slowly, the functionality is transforming WhatsApp into a social media, meant to share, instead of a private messaging app only, meant to text, talk or videoconference. Through the Status feature, users can publish pictures that remain on the service for 24 hours and which can be seen by anyone who has their number. But still “observers” must have the phone number of the publisher, which preserves some kind of privacy. Moreover, WhatsApp maintains private messages separated from the Status stories. Users must access a different tab on the app to watch those stories, which could mean that ads on the feature may not result so intrusive for WhatsApp users.
The Status feature on WhatsApp is the social media’s first point of entry to the advertising world. Facebook will start taking advantage of it by 2020 when they roll out Status’ ads. Given that smartphone usage is still on the rise, it could mean that WhatsApp ads could end up driving Facebook’s business (read Mobile consumption is up… way up.) As WhatsApp user numbers increase—in 2023, eMarketer estimates there will be 3.12 billion mobile messaging app users, with WhatsApp leading the market,—Facebook stands in the best position to milk the cow, again.
The only question that remains is how the company will manage privacy concerns. Companies will not only have access to personal data (preferences, likes, friends) they will also be able to access phone numbers, and contact numbers, as well as locations. And, here lies the rub, we wonder if they will have any access to snippets of conversations for targeting purposes.
All of this is yet to be seen. For now, if you are a WhatsApp user, get comfortable and enjoy the Status-free ads feature while you can. If you are a Facebook hater and despise ads, it’s time to get off the service. Although not much will change, as the Status feature remains a marginal piece of the WhatsApp service. But be assured, come 2020, you’ll have ads on every single social media service, including your phone book.