over half of the world's 5.3 billion internet users are on the messaging platform WhatsApp owned by meta WhatsApp is the world's largest social messaging app with almost as many users as Facebook over 100 billion messages are exchanged on the platform every day it's being used truly globally so think of India Indonesia Brazil it's sort of everywhere and it's effortless to use you maybe don't think too deeply about using it but you would be in real trouble if someone took it away but that's not necessarily the case in the U.S while nearly a third of the U.S population does have WhatsApp for most Americans it's not their primary messaging platform and though meta doesn't break out whatsapp's Revenue it's estimated to be between 500 million dollars and one billion dollars a minuscule portion of the nearly 117 billion in annual revenue that meta brought in last year unlike Instagram and Facebook WhatsApp doesn't run ads nearly all of its Revenue comes from business messaging which it introduced in 2018. with this service large companies pay a fee to enter interact with customers on the platform it's a growing market and WhatsApp is leaning in we expect business messaging Market to be worth about 50 billion in about four or five years time right now nearly all of that market share comes from regular SMS messaging think of an airline texting you about a flight delay or your bank texting you a confirmation code to log in but those interactions and much more could soon take place on WhatsApp and meta is looking towards this as its next major Revenue Source you know our Playbook over time has been build services try to serve as many people as possible you know get our services to a billion two billion 3 billion people and then we we basically scale the monetization after that and we've done that with Facebook and Instagram WhatsApp is really going to be the next chapter with business messaging and commerce being a big thing there thank you WhatsApp was founded in 2009 by former Yahoo employees Brian Acton and yonkum the initial concept was for an app that would display statuses next to your contacts names so you say things like I'm off to the gym or I'm just getting my hair done and that's why they picked the name WhatsApp it's intended to sound like what's up but they saw very early on that people were really using it for messaging and so they pivoted into building out a full messaging service that's when users started flocking to the app at the time free texting Services were scarce blackberry's BBM messaging was the main alternative and while unlimited texting plans have been the norm in the US for many years they were and are much less ubiquitous in the rest of the world but WhatsApp has always been essentially free although it did initially have a one dollar annual fee which it scrapped in 2016. back in 2009 it was extremely expensive to send a text message absolutely and you know if you want to make a call or particularly an international call that might set you back hundreds of dollars so long as both parties are connected to Wi-Fi WhatsApp allows for free international calls this along with free unlimited texting is the main reason why WhatsApp took off internationally and among American users with family and friends abroad but not so much for domestic correspondences the app has been growing steadily since its Inception though and was acquired by Facebook for 19 billion dollars in 2014. at the time it was the largest acquisition of a venture-backed company in history can you tell me the growth curve of WhatsApp by 2014 when it was acquired by metha it already had 200 million users and at that time they could see a path to 1 billion users but actually within a couple of years of being owned by Mata it already had two billion users and it's continued to grow all messages became end-to-end encrypted in 2016. however Founders Acton and coombe left Facebook in 2017 and 2018 respectively after a major change to whatsapp's privacy policy allowed for its user information and metadata to be shared with its parent company but that ultimately didn't hamper growth with lockdown she started to see a big increase in terms of people using kind of signing up for WhatsApp when Alice Newton Rex joined WhatsApp four years ago she said the team had around 15 product managers today they have around 90 and serve 180 countries in total now the company is rolling out new features like channels where users can subscribe to get updates from individuals businesses or organizations like sports teams in a news feed-like format so far this feature is available in Singapore and Columbia WhatsApp is also getting into payments allowing users to link their bank account and send money through the chat interface that's available in India Brazil and Singapore but when looking towards Revenue growth WhatsApp has its sites on its business messaging platform which it's been expanding in markets like Brazil India and Indonesia for the past few years WhatsApp have always been very picky about who and what they allow over their channels it's only the last couple of years that WhatsApp have been really accepting of this business matching Market WhatsApp charges medium to large companies for every conversation that they have with customers the fees vary by country and the type of conversation for example marketing conversations like a business sending a customer information about a promotion or offer are more expensive than on authentication conversation where a user is prompted to enter a one-time passcode in Brazil for example a marketing conversation is 6.25 cents an authentication conversation is 3.15 cents a utility conversation which updates a customer about a transaction or purchase for example is 3.5 cents and a customer service conversation is three cents today these conversations don't usually take place on WhatsApp Lane says that about 95 percent of business messaging spend is concentrated on standard SMS messaging he expects that figure to drop to 75 to 80 percent in the next four years as more Brands turn to Whatsapp SMS is good for what it is it's sufficient it's effective it's powerful but it's only you know 160 characters and it's limiting and what we can actually do with it there are other Alternatives like MMS messaging which stands for multimedia messaging service and allows for up to 1 600 characters and attachments like images and videos but this isn't prevalent outside of the US and Canada and WhatsApp hopes to offer an even richer experience anywhere in the world so for example if you're a restaurant you can put the whole menu on WhatsApp whereas the experience that you can have on the website or on an app you can now have that within the messaging experience if you go to India or Brazil you look around you'll see WhatsApp numbers posted up in shop Windows everywhere we're even trying in Brazil a business directory where people can search for businesses they want to talk to them what's up this definitely isn't the case in the US though and so long as WhatsApp remains a side player in the domestic messaging Market U.S consumers could be reluctant to adopt WhatsApp for business communication when it's just not what they use in their personal life I think that's one vital way that I think WhatsApp could expand into the us as if they try and on board as many US brands or Enterprises through their catalog as they come WhatsApp is also experimenting with monetizing messaging for small businesses well medium and large companies must message customers through their WhatsApp business platform small businesses like a hair salon or coffee shop can simply download and use the free WhatsApp business app but now the company is rolling out paid premium features like the opportunity to build a WhatsApp website and the ability to access a corporate account on up to 10 devices in June meta announced that the WhatsApp business app had reached 200 million monthly active users up from just 50 million in 2020 and in its latest earnings call the company was optimistic about its business platform as strong business messaging Revenue growth from our WhatsApp business platform was partially offset by a decline in other line items while meta doesn't provide breakout data on WhatsApp Revenue overall Lane anticipates that the trend will continue we expect what's up to be worth roughly between about seven to ten billion dollars in terms of revenues from business messaging within about a five six year period That's up from an estimated 500 million to 1 billion dollars today as meta continues to pursue its uncertain bet on the metaverse near-term growth opportunities like business messaging could help to stabilize the company because when it comes to messaging services well there's Regional competition there's no other platform that has whatsapp's Global reach you're gonna have these individual markets where you do have a very strong kind of platform provide receipt obviously China's WeChat in Japan it's lying in South Korea it's cow talk but again these are very much Regional channels rather than kind of global channels and even if WhatsApp business messaging doesn't take off as expected there are other ways that WhatsApp can drive revenue for meta's family of apps for example with a tool called click to messaging customers can click a Facebook or Instagram ad to start a conversation with that business on WhatsApp and WhatsApp business users can purchase create and publish ads for Facebook and Instagram from within the app itself as the channels feature continues to be developed Newton Rec says that there could be monetization options there as well maybe you'll be able to subscribe to a channel and you'd pay a small fee to hear from a a news Outlet or some celebrity who you care about and that could include also allowing Channel owners to promote their own channel in our directory even advertising within channels seems like it's not completely off the table and as far as like when we discussed this a little bit but advertising not yet but you know that's something that could be in the future full channels we're looking at a whole range of different monetization opportunities we haven't fixed on any one thing yet one way or another is whatsapp's user base continues to expand we may finally see meta's historically large bet on the messaging service start to pay real returns by 2027 we expect that to be about 4.1 billion WhatsApp users we think it will be the platform where Brands really start to invest and it will generate billions and billions of dollars worth of spend thank you
