WhatsApp Business Model: How WhatsApp Makes Money

This post may contain affiliate links and I may receive a small commission if you make a purchase using these links – at no extra cost for you. Please read my disclaimer here.

Hey, does WhatsApp ring a bell? You can do all sorts of things with this app. Even forwarding files and links to playing minigames with your friends. This popular messaging app sets the standard for new communication trends.

With over 2  billion people using it every month to keep in touch with their loved ones, it's a total game-changer when it comes to staying connected. 

Plus, Whatsapp’s engagement model is a must-have for entrepreneurs to take advantage of some exciting new opportunities. 

Let’s dive deeper into the world of Whatsapp!

How did WhatsApp start?

WhatsApp is a prime example of creating solutions to problems.

Established in 2009 by Jan Koum and Brian Acton, WhatsApp emerged after Koum experienced poor network service, specifically to receive phone calls, whenever he's on vacation.

Whatsapp

Koum envisioned a messaging app that would enable users to send messages through the cell without dealing with poor signal.

WhatsApp initially went through obstacles, competitors, and the necessity to grow a vast audience base.

Yet, it soon became famous due to word-of-mouth marketing and promoting user-friendly interface. Soon, it gained widespread attention from smartphone users who sought a secure and inexpensive means of reaching their contacts. 

The business model’s impact is prevalent in the founding and further establishment of WhatsApp. The founders had a vision of setting up a messaging platform that was simple and secure. 

This decision would lead to business expansion and has been a key component of its business model. Subsequently, this has encouraged large-scale acceptance and use.

WhatsApp for business

WhatsApp Business is WhatsApp's dedicated business application where business owners can communicate with their customers. 

It comes with features that create a professional outlook for SMEs in their pursuit of delivering the best customer service experiences. 

This feature helps businesses highlight vital business information such as address, contact details, and website links. 

Secondly, it enables automatic messages ensuring that customers are met with a prompt response.

The benefits of using WhatsApp Business for businesses include:

  • Companies can easily engage their customers using a platform they are already familiar with, ensuring that they have a high chance of reaching the target and converting;
  • Businesses can offer instant customer service, maintaining high standards in service delivery;
  • Customers are not charged for messaging, meaning that businesses can reach customers across the globe at no cost.

WhatsApp Business has facilitated countless successful businesses all over the world such as:

  • Food delivery services that use it for order placements and updates;
  • E-commerce businesses that use the service for sending order confirmation and shipping;
  • Healthcare systems that use WhatsApp Business to book appointments and offer telemedicine. 

These are only a few examples of how WhatsApp Business can simplify business procedures and promote customer convenience.

WhatsApp Pay

WhatsApp Pay is a feature within the app that facilitates digital payments. Through it, one can pay and receive payment by other users on the messaging platform securely. 

A user can connect their bank account or debit card with the feature for hassle-free sending of money to their contacts. 

WhatsApp pay

The payment system is under end-to-end encryption to keep the financial details of individuals private and secure.

WhatsApp Pay also has a significant advantage over other digital payment platforms including, but not limited to:

  • The ability to potentially reach the platform’s billions of active users via the parent company;
  • Opportunity for businesses to integrate WhatsApp Pay more easily into their existing customer communication channels;
  • Users can access the payment platform without having to install any additional apps, providing a more streamlined user experience.

That said, it’s understandable how WhatsApp Pay can be a turning point for businesses and users. 

It's a seamless and secure way for businesses to acquire payment from their customers. That’s why they no longer depend on traditional methods, which boost their sales and accelerate cash flow. 

For users, it is a simple and hassle-free way since everything is already within the app. Now, you can skip the long lines.

Therefore, digital payment usage will increase massively, and the concept of cashless economies will be a couple of steps further.

How much money does WhatsApp make?

WhatsApp earns its money from two primary sources: a subscription fee and advertising. The platform would charge $0.99 per year once a user’s first year of usage was successfully completed. 

Nevertheless, the firm decided to do away with the annual subscription in 2016 and find alternative ways of accruing money.  Even without a subscription, WhatsApp has helped its users make millions of money.

The so-called Status feature of the platform started serving as a source of additional income.  On WhatsApp, users can keep others informed through images, videos, or texts that vanish after 24 hours. 

The advertisements appear among those of other individuals, providing a customer-sharing supporter the ability to pay and obtain a larger market share.

Getting acquired by Facebook (now Meta) 

Since Facebook (now Meta) acquired WhatsApp in 2014, the app became more valuable. In 2020, WhatsApp’s overall revenue was nearly $4 billion. This amount is significant progress from previous years, and it demonstrates the potential of new functions to attract more users.

For instance, only a few messaging applications have been able to bring in substantial income without relying on marketing. 

Facebook paid a whopping $19 billion for WhatsApp in 2014, making it one of the largest tech acquisitions ever. The purchase was motivated by several factors, such as: 

  • WhatsApp’s fast-growing and large user base and user growth

  • Facebook saw WhatsApp as a platform that could be leveraged simply to connect firms with clients 

facebook bought whatsapp

Even though the service was operated separately from other Facebook services at that time it inevitably became more and more dependent on the broader Facebook ecosystem. 

As an example, WhatsApp began sharing user data with Facebook for retargeted advertising which led to privacy concerns from its users.

Moreover, after this acquisition, WhatsApp started exploring additional monetization avenues.

WhatsApp's revenue model

WhatsApp’s revenue model provides businesses a platform for their ads and also provides other business services.

An example of this is when ads are included in the app's Status function– that is, it provides an opportunity for firms to advertise their own products to even more people.

WhatsApp Business API

Apart from advertising, WhatsApp provides various business services that WhatsApp uses to make money.  One of them is an API called the WhatsApp Business API.

The feature allows businesses to connect WhatsApp paid versions on their customer communication systems to offer efficient customer services. 

The API, just like the rest, will charge users to gain access to several additional features and more customization options.

WhatsApp’s revenue model is unique when compared to many other messaging apps primarily because of its heavy reliance on both advertising services and business services. 

In other messaging apps, most of the revenue is generated through in-app advertising, but WhatsApp, through the unique initiative of business services, creates a new field for revenue generation.

WhatsApp's monetization strategy

WhatsApp’s monetization approach focuses on finding a balance between revenue and ensuring a good user experience. The platform was cautious in terms of ads integration since most applications disrupt the user.

Consequently, this made recommender systems and onboarding features more difficult. Since so few ads are displayed in the Status, the layout is clean and simple.

WhatsApp's monetization strategy

WhatsApp’s ad policies prioritize privacy among the users. For example, the platform does not allow targeted advertising using WhatsApp from users’ chats and communication.

Their monetization strategy revolves around striking a balance between generating revenue and maintaining a positive user experience.

However, ads are targeted based on users’ interests and demographics, which could have been extracted from their Facebook user data.

By following the standards of their monetization strategy, WhatsApp allows brands to effectively promote their products or services. 

That said, WhatsApp’s strategy remains conflicted because of a few reasons:

  • Users should only see ads based on their preferences without breaching their privacy
  • Ad space is limited, so competition is high and prices will increase.
  • These ads should attract the user’s attention, but not bombard their application with them.

WhatsApp's user base

With over 2 billion monthly active users around the world, WhatsApp is an excellent platform for sending messages worldwide. It is user-friendly, compatible across platforms, and enhanced encryption. Plus, their end-to-end encryption is impenetrable.

The demographic distribution of users on WhatsApp shows that the platform is used by people from all age levels and groups.  Yet, the most significant percentage of consumers is young adults and youths, with 56% of people aged 18 to 34 using WhatsApp globally.

Compared to other messaging apps, WhatsApp distinguishes itself through its broad customer demographic and a considerably big number of users.

Future plans for WhatsApp business model

WhatsApp is a messaging platform giant. The app continues to grow and expand its integrations. Yet, WhatsApp plans on adding more features that can benefit both users and businesses.

WhatsApp Business plans on adding new capabilities for businesses like chatbots, appointment scheduling, or order status tracking. The messenger is keen on entering the e-commerce and digital payments market.

Use chatbots for lead generation

WhatsApp Pay has only recently started a partnership within a communication platform, but there are plans to implement and extend payment services for businesses. 

The business model of the company is developed and requires further development so that: 

  • Users can shop from directly within the app
  • Businesses can provide a new income source

All in all, WhatsApp has strategically positioned its business model for the benefit of both a business and the consumer. 

Businesses can use features to interact and provide access to a consumer’s business relationship. Whereas users can digitally pay within the app while keeping their transactions private. 

Plus, advertisements and business services generate the majority of the platform’s revenue. WhatsApp thus continues to be an influential and prevalent messaging app with a huge user base and potential growth.

FAQs

What is WhatsApp?

WhatsApp is a free-to-use messaging app that includes features that can send text messages, voice memos, make voice and video calls, pictures, documents, and many other media files.

What is WhatsApp Business?

First, WhatsApp Business is a completely different app from the traditional WhatsApp.

It's specially made for small businesses to easily communicate with their customers. 

Best thing is, you can shoot off quick responses, automate messages, and use labels to keep everything organized. It's a total lifesaver - your customers will love how easy it is to chat with you!

What are the ways from which WhatsApp makes money?

Its revenue stream is mainly linked to its business features like WhatsApp Business API and the WhatsApp Business App.

The aforementioned apps offer companies special tools to interact with their clients. It monetizes business accounts and services, while maintaining the messaging platform free for individuals. 

Furthermore, advertising another source of revenue integrated within the Status feature to assist businesses promote their goods and services.

Is WhatsApp free to use?

Yup! WhatsApp is completely free to download and use for personal messaging.

How many people currently use WhatsApp?

As of 2024, WhatsApp has over 2 billion active users worldwide.

Is WhatsApp secure to use?

WhatsApp is end-to-end encrypted which ensures user privacy and security.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}