WhatsApp is one of the most popular instant messaging platforms available today, as such it is widely used by people from different parts of the world.
One question that borders most users is how does WhatsApp make money? That question will be answered in this article, but before then let’s look at some history surrounding the messaging app WhatsApp.
- A Brief Overview of WhatsApp
- How Does WhatsApp Make Money?
- How Does WhatsApp Business Make Money?
- What are the Pros and Cons of using WhatsApp?
- What is the Difference Between WhatsApp and Regular Texting?
- Why is WhatsApp so Popular?
- Is it Safe to use WhatsApp?
- How can you Make Your Whatsapp Safer for Your Children?
- How Does a Free app Make Money?
A Brief Overview of WhatsApp
WhatsApp was founded in 2009 by Brian Acton and Jan Koum as an alternative to pricey SMS services.
The app allows users to upload their contact book and message anyone who has the app installed, at no cost. It is available for iPhones, Androids, and desktops.
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Facebook Inc. (FB) purchased WhatsApp in February 2014 for $19 billion and according to the 2014 Facebook Form 10-Q, in the nine months preceding Sept 30, 2014, WhatsApp generated revenue of $1,289,000.
On Monday, April 30, WhatsApp co-founder and Facebook Inc. director Jan Koum announced his departure from Facebook.
Media reports indicate that Koum decided to leave after a disagreement with Facebook over its use of user data and its desire to allow advertisements on WhatsApp.
Koum, along with his co-founder Brian Acton, has long been an advocate for the privacy of WhatsApp users.
In February 2020, WhatsApp had two billion users and was Facebook’s second-biggest property, after its namesake app.
It has surpassed Facebook’s messenger and Instagram, the third- and fourth-biggest properties. So how is WhatsApp making its money?
How Does WhatsApp Make Money?
The short answer used to be $1 at a time. In some countries, the app used to cost about $1 to download; in others, the first year is free, but each subsequent year costs $1; in other words, WhatsApp had a subscription model.
At the peak under this model, it had about 700 million users worldwide; yearly revenue can be estimated at $700 million per year at that time.
In January 2016, Facebook revealed in a 10-Q filing that because WhatsApp was monetized in “a very limited fashion,” it may not be generating meaningful revenue in the long term, hinting that the strategy would change.
Shortly after, WhatsApp announced in a blog post that the era of subscriptions had come to an end and the messaging app would now be free to use.8
There are still no ads in the app, however. “Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from,” the company wrote at the time.
The goal is to have people communicate directly with their banks, airlines, etc. over the app, while the businesses pick up the bill previously paid through subscriptions.
Though WhatsApp’s financial statements aren’t public (Facebook doesn’t break down its revenue by company), Forbes estimated potential revenue to be $5 billion and the average revenue per user to be $4 by 2020. As of February 2020, WhatsApp had over two billion users
WhatsApp has become one of the most popular messaging services in the world with only room to grow.
Whether you believe that Facebook overpaid for WhatsApp or not, the fact is that the app has a growing revenue stream with endless possibilities that will allow it to bring in more revenues over time.
How Does WhatsApp Business Make Money?
The WhatsApp Business API is launched to let businesses respond to messages from users for free for up to 24 hours, but will charge them a fixed rate by country per message sent after that.
Businesses will still only be able to message people who contacted them first, but the API will help them programatically send shipping confirmations, appointment reminders or event tickets.
Clients also can use it to manually respond to customer service inquiries through their own tool or apps like Zendesk, MessageBird or Twilio.
And small businesses that are one of the 3 million users of the WhatsApp For Business app can still use it to send late replies one-by-one for free.
After getting acquired by Facebook for $19 billion in 2014, it’s finally time for the 1.5 billion-user WhatsApp to pull its weight and contribute some revenue.
If Facebook can pitch the WhatsApp Business API as a cheaper alternative to customer service call centers, the convenience of asynchronous chat could compel users to message companies instead of phoning.
Only charging for slow replies after 24 hours since a user’s last message is a genius way to create a growth feedback loop. If users get quick answers via WhatsApp, they’ll prefer it to other channels.
Once businesses and their customers get addicted to it, WhatsApp could eventually charge for all replies or any that exceed a volume threshold, or cut down the free window.
Meanwhile, businesses might be too optimistic about their response times and end up paying more often than they expect, especially when messages come in on weekends or holidays.
WhatsApp first announced it would eventually charge for enterprise service last September when it launched its free WhatsApp For Business app that now has 3 million users and remains free for all replies, even late ones.
Importantly, WhatsApp stresses that all messaging between users and businesses, even through the API, will be end-to-end encrypted.
That contrasts with The Washington Post’s report that Facebook pushing to weaken encryption for WhatsApp For Business messages is partly what drove former CEO Jan Koum to quit WhatsApp and Facebook’s board in April.
His co-founder, Brian Acton, had ditched Facebook back in September and donated $50 million to the foundation of encrypted messaging app Signal.
What are the Pros and Cons of using WhatsApp?
When you compare WhatsApp with SMS or MMS you will see many features and options which are more advanced.
Now we want to discuss the pros and cons of WhatsApp to explore its features in deep.
Pros
- End-to-End Encryption: WhatsApp is a secured messenger with end-to-end encryption. No one can read your conversations including WhatsApp.
- 2-Step Verification: It is an extra layer of security for your WhatsApp account. If you are privacy conscious, you can use 2-Step verification to make your conversations more secured.
- Group Calling: WhatsApp has a group calling feature. You can make group calls to your friends, relatives or any others with ease.
- Voice Messages: If you are in an urgent you can leave a voice message to the persons WhatsApp account.
- Video Calling: It can replace the video calling apps you are using, you can make video calls to your contacts without any hassle.
- For Photos Transferring: Do you know there is a trick to send photos over WhatsApp without compressing the quality? Yes, click on documents option instead of choosing pictures or videos. Now select the photo you want to send, it will send the picture without compressing it.
- Filters Support: Do you know WhatsApp has built-in image filters? Yes, you can tweak your image before sending to a contact. Once you select a photo on the editing screen, swipe up on this screen to open the filters’ drawer. It will simply replace the image filter apps like Instagram, SnapSeed, and Prisma.
- User-friendly: WhatsApp user interface is very user-friendly and neatly organized.
- Starred Messages: This feature will let you put a star for important messages. Never lose the important message in the ample of messages.
- Unsend option: If you did not like the message you sent to mistakenly sent the wrong message to a person you can unsend it. Tap on the message you want to unsend, here tap on trash button and choose “Delete for Everyone” option to unsend the message.
- Text Formatting: It is an underrated feature is available for WhatsApp users. The text formatting support is rolled out in the year 2016, which lets you send texts in various formats using some syntaxes.
- Send Files: You can send images, files, audio or video clippings, contacts through the WhatsApp. No email is needed to send them, it happens with a single tap.
- Ad-Free: Many messengers and chat service apps come with advertisements, you can avoid them only in the Pro version which is a paid option. WhatsApp is a completely free messaging app with no advertisements.
- WhatsApp Web: It lets you access your WhatsApp on the web browser. If you are working on a PC or Mac or any other platform, you can check and send WhatsApp messages without using your phone. The WhatsApp Web is free to use tool for accessing WhatsApp in a browser.
- Sharing Location: WhatsApp allows sharing your location to your contacts. If you want to share your location on WhatsApp, just tap on the + icon and now tap on location option.
- Emoji, GIF’s, and Stickers Support: WhatsApp offers various stickers, GIF’s and emojis to pimp up your conversations.
- Platforms Availability: WhatsApp is available for almost all platforms. It has dedicated apps for Android, iOS, Windows Phone, Nokia, and Jio Phone.
Cons
- No Content Censorship: WhatsApp doesn’t have content censorship. Some people share inappropriate information across the network, it may be violence or dangerous content. Without our consent, it reaches to our inbox.
- Privacy: Another disadvantage of WhatsApp is its privacy. If anyone knows your number, they can see your profile pic. It reveals how you look with your consent. Some people add your number to groups without asking your permission. It is an annoying problem and you will see a ton of unwanted group messages in your account.
- Upload File Size Limit: WhatsApp has put a limit in the file size while uploading. You can’t upload the file more than 100MB in size.
- No Self-Destruction Option: Many messaging apps are offering the self-destructive messaging option. Apps like Telegram, Line, Snapchat, Dust have this option. WhatsApp doesn’t have this feature. However, there are few methods available to do this manually.
- Data Hogging: If you are in many WhatsApp groups and friends list there are chances of huge data consumption in WhatsApp. The continuous exchange of videos, messages, GIF’s, stickers consume data whether it is a cellular data or a Wifi plan. If you are in a metered data network, take care of WhatsApp data usage.
What is the Difference Between WhatsApp and Regular Texting?
Although SMS is still the leader in mobile communication, particularly in the U.S., there are some regions, such as Europe, where WhatsApp is fast becoming the mobile messaging platform of choice both among private users and businesses.
According to Statista, of the mobile phone internet users in the UK,84% actively use the app, and correspondingly, 81% in Italy, 73% in Spain, 65% in Germany, and 23% in France.
In contrast, only one-third of internet users in the United States have downloaded and use the app – most of which are people who have traveled to or have friends in Europe.
So the question is what is the difference between WhatsApp and SMS texting and why are more people switching to WhatsApp? Lets see.
Cost
The primary reason why WhatsApp is more popular than SMS in Europe is that it’s free and SMS is not.
Unlike in the U.S. where SMS texting is priced at a flat rate and comes standard on nearly all mobile carriers, a single SMS text message in Europe can costs around 0.07 to 0.11 Euro cents, making it more costly to use than WhatsApp.
Some EU mobile carriers also allow their users to opt out text messaging as part of their bundle, and alternatively offer more enticing data packages to their customers.
U.S. mobile users traveling to Europe will also find WhatsApp more practical to use since most U.S. mobile carriers charge a hefty fee for international text messaging.
As such, instead of getting a local number once they arrive, most U.S. travelers instead download WhatsApp before they travel to Europe.
While users need a working internet connection to send a message on WhatsApp, it is not a big issue for Europeans since the region already has extensive 3G or 4G data connections available.
While mobile data usage does not come free, users do regularly have the option to connect to free Wi-Fi networks (while securely sending messages since WhatsApp use end-to-end encryption), and they don’t have to pay for every single message as well.
Supported Message Types
Another reason for greater Europeans WhatsApp usage over SMS is that the former allows them to send more types of content than the latter.
Aside from the fact that a single SMS message only allows for 160 characters, this platform also does not support voice messages, images, videos, audio files, documents.
In case they want to send these types of content, they need to use MMS instead, which is more expensive than a standard SMS.
On the other hand, WhatsApp allows users to send text messages to other WhatsApp users without counting words and without restrictions on multimedia attachments – all for free.
Group Messaging and Business-Grade Features
While both SMS and WhatsApp support group messaging, there’s a significant difference in how they work.
While European users can send text messages to multiple recipients through SMS, the replies will appear as individual conversations on the SMS app, compared to the threaded view that WhatsApp has.
WhatsApp has also introduced new features that especially cater to the needs of businesses.
WhatsApp Business is a new version of the app that allows companies to create business profiles, allow multiple accounts to manage a profile, and take advantage of analytics – features that are only available on enterprise text messaging solutions but not on standard SMS apps which most mobile devices have.
WhatsApp and SMS – though have the same user base, serve a different purpose.
While SMS uses a cellular network to allow people to send short and urgent messages, WhatsApp is an instant messaging app that is most effective for users that are always connected to the internet and want to have a more engaging mobile conversation with their peers.
In the business perspective, both channels can significantly help European companies to improve their internal communications and customer engagement, though their usage in business requires proper supervision and controls.
For instance, financial companies in Europe that allow their employees to use SMS text messaging and WhatsApp at work must be able to capture and record the messages in order to comply with MiFID mobile phone recording regulations.
Whether you use SMS or WhatsApp in your business, you must record mobile messages and capture voice calls that were made through these apps to stay compliant with various text message archiving and call recording regulations.
TeleMessage’s WhatsAppArchiver is a unique platform tailor-made to solve compliance and regulation issues by capturing and archiving WhatsApp chats.
This platform works exactly like the standard WhatsApp application, ensuring that your employees will still be able to send work-related communications easily and quickly.
The benefits of using TeleMessageWhatsAppArchiver in your business include:
- Archive all WhatsApp communications
- Use WhatsApp to communicate with customers, employees, and stakeholders
- Search, track and retrieve WhatsApp messages in the corporate archive
- Deposit WhatsApp messages with any email archiving vendor
- Full administration and reporting
Why is WhatsApp so Popular?
If you’re left wondering why it’s valued so highly and so popular, here are some of the reasons WhatsApp has such a loyal following across the globe.
1. No Ads
Seriously, none. WhatsApp remains completely ad-free.
“When we sat down to start our own thing together three years ago we wanted to make something that wasn’t just another ad clearinghouse,” the company explains on their blog. “Remember, when advertising is involved you the user are the product.”
2. It’s Cheap
WhatsApp allows users to send messages for free over the Internet, so it bypasses phone carriers that may otherwise charge users to send texts over their networks. It’s also free to install.
3. Works on Most Phones
That includes Android, Blackberry, iPhone, Nokia and Windows smartphones.
4. No Need to Add Contacts
When you download the app, WhatsApp automatically scans through your address book and connects you with those who have WhatsApp installed on their phones.
5. No International Charges
With WhatsApp, it’s possible to avoid the relatively costly practice of sending SMS (Short Message Service) text messaging overseas.
6. Online Stalking, Monitoring
WhatsApp has a “last seen” or “online” timestamp feature, which tells you if your contacts are online, and the last the time were connected to WhatsApp.
7. Status Updates Galore
Whether you want to be available, busy, sleeping, or at the gym, it’s easy to get creative with your status update.
8. Personalize Group Messaging
With WhatsApp you can broadcast a message to many contacts, but each person will get the message individually
Is it Safe to use WhatsApp?
WhatsApp often makes big announcements about its safety and security like end-to-end encryption but glances over the threats it faces. Being the biggest social messaging apps, WhatsApp has caught the eye of the miscreants and spam threats have begun to rear their ugly heads.
Below we have outline five major drawbacks that WhatsApp needs to take care of.
Malware threats
WhatsApp users have often been at the receiving end of malware threats via an infected link or file but recently a new malware called ‘Agent Smith’ has been spreading that alters WhatsApp and replaces it with a malicious update that serves ads.
The malware is capable of hiding its icon from the phone’s launcher and can pose as WhatsApp to serve advertisements.
This is just one of the possible ways the malware can use the affected device to send money back to the hackers, as per a typical pay-per-click system. The best way to avoid such malware is to use apps and services only from the official sources.
Backup messages are not encrypted
WhatsApp has made loud noises about end-to-end encryption that ensures that only you and the person you’re communicating with can read what’s sent. However, that encryption does not work if the data is stored as a backup on Google Drive.
WhatsApp had recently signed a pact with Google to allow its users to store messages on the search giants’ cloud storage offering.
Hacker can alter photos and videos
A security flaw in WhatsApp has come to light that allows potential hackers to alter the image, audio or video files. The vulnerability stemmed from how media files are stored in WhatsApp.
The Media File Jacking threat is especially concerning in light of the common perception that the new generation of IM apps is immune to content manipulation and privacy risks, thanks to the utilisation of security mechanisms such as end-to-end encryption.
Fraud and fake news: In India, WhatsApp has come under the government’s scanner for spreading fake news and misinformation. WhatsApp was caught up in the midst of several incidences of violence that occurred in India during 2017 and 2018.
The Facebook-owned company has come up with several measures to curb this menace but has still fallen short of completely curbing it.
WhatsApp status isn’t private
The Status feature on WhatsApp has been directly lifted from the one found on Instagram. However, WhatsApp is all about your phone contacts and not all of them are your friends and family members. Any person in your contact list can view your status.
Luckily, WhatsApp now gives its users control over who can view their statuses but if your contact list is huge then it becomes a task to pick and choose a person you want to share or not share your status.
How can you Make Your Whatsapp Safer for Your Children?
Download and discuss the app. WhatsApp is easy to download and understand (simple texting interface). Once you know the basics, discuss the pros and cons of WhatsApp with your child. Ask your child to walk you through his or her app to show you how they use it.
Some questions to consider asking might be:
What do you like most about WhatsApp?
What kind of group chats are you a part of?
What kind of media do you mostly receive and send?
Are there any people in your group chats you don’t know?
Are your location and account settings as secure as they can be?
Have you shared personal information or your phone number?
Has any situation made you feel uncomfortable while on the app?
Guide younger users. For younger children or new WhatsApp users (age requirement is 13), consider creating a private WhatsApp group just for your family.
Teach your kids to create a safe profile, maximize safety features, block strangers, report bullying, and how to safely share pictures, videos, and communicate. Use this time, teach them the upside of the app and the risks.
Monitor devices, screen time, and behavior. There are a lot of issues to consider and pay attention to when your kids use messaging apps. First, to monitor content, consider security software as well as filtering software.
Second, pay attention to screen time and your child’s ability to balance technology use. Third, monitor behavior. Messaging apps connect kids to groupthink, a variety of content, and several emotional danger zones.
Technology monitoring includes paying particular attention to your child’s emotional and physical health, friend groups, academic performance, and sleep habits.
Talk about privacy settings. Encourage your child to maximize settings and use the two-step verification option that allows a custom PIN for security against breaches and hacks.
Privacy settings will allow users to choose Everyone, My Contacts, and Nobody. Review profile information and omit any personal information (age, phone number, other account links, school name, hometown).
Control location sharing. When location sharing is turned on, the images your child shares on WhatsApp will also show his or her exact location when the photo was taken. Be aware of this and consider keeping location turned off.
Avoid strangers and strange links. Once a person outside of your child’s known circle has his or her phone number, they can send any content directly unless (and until) they are blocked. They can catfish, scam, or groom WhatsApp users.
Talk with your child about the importance of only chatting with known, trusted people and to block messages from strangers. Messages from strangers could contain explicit content, malware, spam, or phishing scam.
Should your child be on WhatsApp? As long as your child is only connected to trusted people (and has some form of monitoring), this can be a relatively safe social app that echos the features of most other apps.
However, every family and every child is different, and whether or not your child is allowed to use the app is a personal decision. If your child is active on the app with your approval, one way to help them navigate the danger zones is to keep the safety conversation on-going and honest. Your guidance is crucial. You’ve got this parent!
How Does a Free app Make Money?
Most of the time, you download an app from the store and simply start using it. Naturally, developers who offer apps for free expect pay in some other form. If you are thinking of developing an app and are unsure how a free app brings profit, here are five ways a free app can make money.
1. Subscriptions
Subscriptions can be a quite useful monetization strategy. App publishers can choose to offer free content in their apps for a limited amount of time and then charge users for a subscription fee that will allow them to access full content without any restrictions.
The popular and common technique used by the majority of free app publishers is to offer a free trial period and then charge the subscription fee to those who wish to continue to access the app content.
This type of strategy is often used for cloud services, audio and video streaming, and online news services.
To ease the integration of this revenue model, Apple is paying extra attention and making significant changes in how app subscription models work. In the present model, Apple will maintain its current 70/30 revenue split for the first year of subscription. After one year, the new 85/15 revenue share will automatically be implemented.
This new format was made to encourage the app publishers to sell their apps for a recurring fee instead of a one-time cost. But despite this, only 5% of the most successful apps are using a subscription revenue model or developing subscription-based mobile apps, according to Sweet Pricing.
2. Advertising
Advertising is probably the most common and easiest to implement when it comes to free app makes money. And it is also done via a third-party ad network.
According to the latest report and study by Statista, here are the details on mobile advertising spending in the year 2019 and expected in 2020.
Year 2019: 190 billion U.S. dollars
Expected in 2020: 280 billion dollars
Using ads to monetize apps and make money is quite simple. An app owner just needs to display commercials inside their mobile application or opt for affiliate marketing and get paid from the third-party ad networks.
You can get paid every time an ad is displayed (per impression), per click on the ad, and when a user installs the advertised app. Being a free version app, you can also run ad campaigns to generate ad revenue for a specific period of time.
3. Selling Merchandise
Another innovative approach is to sell merchandise in your free mobile apps.
Many e-commerce businesses build free versions to sell physical goods such as toys, shirts, shoes, etc. these physical products can be sold directly to the app or via email marketing.
To encourage app publishers to use this strategy, Amazon has started a service called Merch by Amazon that allows publishers to create their artwork, upload it to their platform and promote their products. It is a win-win strategy for the owners and app users.
To make things easier, Amazon even takes care of the payments and delivery of items.
4. In-App Purchases
In-app purchases are directly made from within the free mobile apps and are usually quite a simple process. They’re typically used to access special contents or features such as powerups, restrictive levels, or additional features.
In simple words, in-app purchases provide an ability to sell a variety of virtual items directly from the app. The best free game apps like Clash of Clans, Angry Birds, have enhanced their user experience by providing users with in-app purchases.
According to Forbes, apps with in-app purchases generate the highest revenue for their publishers. This monetization strategy is also expected to dominate in the years to come.
Generally, this model is used by game publishers, mostly because of the digital money. In fact, half of the games provide more than one game currency such as gems, coins, and gold. Such in-app purchases play a major role in app downloads.
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Overall, this is an interesting model for converting non-paying app users into paying users without being too intrusive. Although, you’ve to keep users hooked in your free mobile apps so that they keep paying.
According to the survey by tech company Fyber, “Among ad agencies and brands, there are a number of brands, approximately 77%, which have asked their agencies to invest in the in-app purchases inventory.”
Well, both UK agencies and advertisers are now spending the majority of their advertising budgets on mobile. The reason for investing in in-app ads is that the format is more reliable than mobile browser ads. Moreover, improved engagement is another core reason behind in-app purchases.
5. Sponsorship
Sponsorship is one of the less commonly used monetization methods, but it can be still an interesting strategy.
In simple words, Sponsorship in your mobile applications can be a powerful app monetization strategy if the app publisher builds the right niche app for a targeted audience and launch it on behalf of another company.
Similar to websites, app publishers need to consider sponsors whose target audience is the same as the one being addressed by the app. Before building the app, creating a list of organizations and brands that could benefit from the partnership is a good starting point.
A good example of this how do free apps make money through sponsorship deals is Home Depot sponsorship on the Weather Channel App. the animated app background behind the temperature measurement is the advertisement placed by the sponsor to target homeowners interested in weatherproofing their houses.
Conclusion
WhatsApp has become one of the most popular messaging services in the world with only room to grow. Whether you believe that Facebook overpaid for WhatsApp or not, the fact is that the app has a growing revenue stream with endless possibilities that will allow it to bring in more revenues over time.
