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

Facebook’s new Meta logo is seen on smartpone in front of the displayed logo of Facebook, Messenger, Instagram, Whatsapp and Oculus in this illustration photo taken October 28, 2021.

Dado Ruvic | Reuters

WhatsApp is already very popular with American consumers. Now, Meta Platforms is more focused on building its small business base.

Facebook’s parent company launched WhatsApp Business in 2018 with simple, free tools to help small businesses stay in touch with customers, giving them a way to interact directly, search for products and indicate interest. ‘purchase.

Soon, the company will roll out a premium service for small businesses, and it will double down on a new advertising format called “click-to-message”, which allows consumers to click on a company’s ad on Facebook or Instagram and to directly start a conversation with this company on Messenger, Instagram or WhatsApp.

These moves provide opportunities for Meta to increase ad revenue, stay relevant with small businesses and generate additional revenue from the premium services it offers, the analysts said.

Keeping more inside 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 is planning to further monetize the platform. That moment could now come.

“If I stay on one of the Meta properties and communicate using Meta, asking questions and buying – all on the platform – there is no loss of signal, and there is more easy for Meta to tell the brand about its return on ad spend,” said Mark Kelley, managing director and senior equity research analyst at Stifel. of social media this year.”

WhatsApp will be the “next chapter” in the company’s story, 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 large audiences and “expand monetization” after achieving that goal. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with enterprise 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 announced a loss in revenue and revenue and forecast a second consecutive quarter of declining sales. Shares of Meta Platforms have lost about half their value this year. Mark Zuckerberg is betting large sums of money, currently at a loss, on a future where the metaverse will be a growth driver for the company. But with his Metaverse bet up to a decade away from materializing, Meta’s CEO stressed that in the short term, WhatsApp is among the initiatives to focus on for growth.

WhatsApp Business has two components. There’s the WhatsApp Business app for small businesses. There is also the WhatsApp Business platform, an API, for large companies like banks, airlines or e-commerce companies. The first 1,000 conversations on the platform each month are free. After that, businesses are billed per conversation, which includes all messages delivered during a 24-hour session, based on regional 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 business information, such as a menu or their business location. Companies can use it to send photos and descriptions of products to customers along with other information that may be of interest to them. Currently, it’s not possible to pay via WhatsApp, but it’s a feature Meta is considering, a company spokesperson said.

Premium features for small businesses – which will be rolling out in the coming months – will include the ability to manage chats on up to 10 devices as well as new customizable WhatsApp click-to-chat links to help businesses attract customers via their online presence, the company said in 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 doorman said. -word.

Why Main Street business is at the center of WhatsApp’s push

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

There’s considerable room for growth in the United States, where WhatsApp is still “a largely untapped resource for small businesses,” said Rob Retzlaff, executive director of the Connected Commerce Council, a nonprofit that promotes access of small businesses to digital technologies. and tools.

This is something Meta sees changing over time. “We have strong belief that this behavior will continue to grow around the world,” Sheryl Sandberg, the company’s chief operating officer, said during her second-quarter earnings call on July 27. The company estimates that one billion users send messages with a business each 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 notes that around 11 million small businesses would have closed all or part of their business without the digital tools to keep them running.

Ad revenue is one of the Meta drivers in promoting WhatsApp Business. “Click-to-message is already a multi-billion dollar business for us and we continue to see strong double-digit year-over-year growth,” Sandberg said on the earnings call. of the second trimester. Click-to-message “is one of our fastest growing ad formats for us,” she added. The company does not specify how much of the activity comes from WhatsApp versus Messenger or Instagram.

Businesses love this format because it’s “an inexpensive way to interact [with consumers] it feels a bit more personal,” Kelley of Stifel said. Additionally, it also alleviates an issue caused by the privacy change Apple made to its iOS operating system last year.

For example, suppose a customer views a Facebook ad for a sneaker retailer 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. “Nobody [else] in the world knows that I bought these sneakers and that there is a direct link between the company and the consumer.”

Additionally, by offering premium services, Meta could increase revenue, at least gradually, Kelley said.

José Montoya Gamboa, owner of Malhaya in Mexico, who has used the free business app for several years, said he plans to pay for the premium version when it becomes available because he likes being able 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 sure. She’s been using the free version of the app for more than two years and would consider paying for it, but the decision will depend on actual features and pricing, she said.

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