The revenue model for WhatsApp is crazy. When we are talking about being crazy, it is crazy.
Whatsapp is one of the leading OTT messaging services. According to a personalized report, the type of users has been accounted for from India and all European countries to 67%.
But there is always a prominent question that baffles everyone’s mind. How does WhatsApp make money? What is their revenue model? Don’t stress it out much because Idea Usher experts will help you to understand the whole working revenue model of Whatsapp and how it functions.
In this article on how WhatsApp earns money, we will first talk about the founders of this service. Started by two founders who were no akin to the idea of advertising and preferred privacy more than anything, Whatsapp eventually ended in the hands of Facebook.
Mark Zuckerberg bought the million-dollar messaging service to help personalize and cater to the needs of various users as well as companies. At the time of writing, there were growing 450 million users at the time of acquisition in 2014 to over 1.6 billion. Founders of Whatsapp was finding it challenging to attain the fact that their app would be handed over to the hands of Facebook so quickly. They did not like the idea of monetizing their app, and thus, they left the agreement.
In this blog, we will talk about how WhatsApp started. Starting right from how does WhatsApp makes money is a waste of time for our readers. So giving an insight on the company and the revenue made all over the year, it will help everyone to have a bit of idea.
Whatsapp was started by both Jan Kaoum & Brian Acton. They worked in Yahoo, beginning from the year of 1998 to 2007.
The two partners wanted to create a private, end-to-end encrypted messaging service for people, all around the world. Thus the reason why they came up with the idea of Whatsapp.
In the year of leaving for Yahoo and starting Whatsapp, they both applied for a Facebook job. But to their luck, both of their applications got rejected by the brand.
Whatsapp was started in the year of 2009. The app dived into iPhone and Android users, and the leading market was poised to grow. When the first report of WhatsApp was launched in the market, it was not even a messaging app. All people could do was to update their status and share it with their networking circle.
After the app got its official release on Ios platforms, the increase in user traction was happening. The app got it’s first to break at the beginning of June 2009.
The messaging app was now changed, and users were growing in number. The developers launched the Whatsapp 2.0 version, and the number of users who registered in the app was 250,000.
In a 2012 post which was laid out on the official website, it was stated why Whatsapp was not ready to sell out ads. Postmates similarly works on ads and generate revenue from the same.
The writer wrote that every single company has a team of developers who are working better to make the app work. There are codes involved with data mining to make the user interface attainable. It even stated that when advertising is involved, you are the user, the platform is your product. At WhatsApp, all the engineers wanted to do is to bring an enriched experience for users and to help them message one another based on the user’s reliability. Your data which was being mined was not in the picture. Whatsapp is seriously not interested in it.
The founders eventually accepted $8 million from Sequoia Capital in April 2011. But they were keen on keeping the platform ad-free.
But if there are no ads, then how does WhatsApp make money in the earlier days?
In the early days, WhatsApp was managing its freemium business model. It has a small yearly subscription fee of $0.99 for continued service.
In 2014, Facebook decided to buy Whatsapp. For about $19 billion, the company decided to buy the group when the service had over and more than 450 million active users over time.
In hindsight, the acquisition was a big turn for the giant tech company. Since WhatsApp was a popular messaging service among people, it was a possible investment for the company in the later future.
Whatsapp founders were genuinely happy with the acquisition and the partnership at that time. They stated that the growth of Whatsapp was dependent on networking. It will help if Facebook is a part of the development and the whole process. The acquisition will help the messaging service to become a part of everyone’s life. On the other hand, WhatsApp would independently run without having to charge the users any fee.
The writers stated that the acquisition changed nothing about the platform.
It was a business and a growth-related opportunity. The developers even said that there would not be a partnership present between the two companies if the core values and principles are compromised. Find out similarly how waze works and how does it make money.
Whatsapp tried to stay independent and protect the value and the privacy of users. It helped users to attain their records and share videos, pictures and even update their status and network more within their circle, without having to compromise on any sort.
Back in the days, Whatsapp was not making dollars from the advertisements which were featured onto the platform. As stated below, there were freemium services for users for Whatsapp business.
The founders were really vocal about their disagreement with the inclusion of advertisements. They always stated that WhatsApp was focused more on user interface and engagement, other than focusing on ads and making money out of it.
They wanted to create something instantly for the users, so they came up with the idea of WhatsApp. Back in the day, WhatsApp had two features that were made available. One was the regular messaging feature where users could send texts to each other. On the other hand, there was the freemium platform where users had to pay about $1 for a subscription. Some of the features which were not included in the first service were included right here.
Whatsapp got its funding of $250k by five ex-Yahoo! Friends. They were made co-founders of the app and were included in the business model as well.
The second funding happened from Sequoia Capital which invested a total amount of $60 million ($8 million in 2011 and $52 million in 2013) in Whatsapp Inc. this was the primary source of income for the 50 members who were working with the group. There was no such expenditure included in the whole process. Back in the day, WhatsApp was clearly meant for sending a simple text or an image to someone within their own networking circle. But as the growing expenses were being targeted, the team found a way to include how to make money. They started charging a small fee of $1 for users having to get the freemium subscription.
But then, the whole strategy of the app was to focus and get more users for the platform. It was based more on engaging with the users rather than making money out of it. But then after two years of wooing the whole group, Mark Zuckerberg made his way into the company.
He bought Whatsapp and made sure that every single employee was put into the payroll group of Facebook. And thus, the 50 members for WhatsApp were a part of facebook’s board. The video feature of WhatsApp has been a huge success as well. Apps such as Zoom and Google meet, have shared their profile generating reports.
Whatsapp was bought by Zuckerberg in 2014 for $19 billion. The company made a leap for the instant messaging service, and this opened a ton of doors and future opportunities for the app. Even the answer to ‘How does WhatsApp make money’ changed after the acquisition.
According to the current revenue model, WhatsApp runs on a user data generation model which is run by Facebook. So the revenue generation is done by the thing which the developers hated the most. It is done by the help of advertisements which are generated on Facebook, by collecting the user data and account information.
The primary model of a company having to earn revenue from its users is when the account confirmation and the user details are collected.
Knowing what the income source of WhatsApp is, users can now understand that every single data which is uploaded by them is tracked by Facebook. It helps them to run the various advertisements on their platforms.
Whatsapp had the earlier privacy feature that the user information is entirely safe. Facebook, the parent company of WhatsApp, got hold of the user information and data and turned out the rules and regulations by twisting them.
On a recent blog post, it stated that.
Whatsapp is now a part of Facebook. By partnering with the brand and the huge tech giant, the company is looking forward to having engaging users on its platform. It has still maintained user policy and makes sure that every single user who has connected with us is safe. Rather than the same, the data is collected and stored for a primary metric. It will help Facebook to understand the user information and the type of things everyone likes. For example, you might have seen an ad from a company, and you don’t like the same. With the metrics shared, you can always control what you wish and choose to share.
One silver lining that came out as a possibility from this merge was that the chats were still tended to end encrypted.
On how does WhatsApp makes money, we shall talk about the future strategies that the company might be bringing up.
Facebook indeed has new plans for WhatsApp down the way. The company has recently shared that the unit is looking to partner with eCommerce and banks worldwide. All these are being targeted to make WhatsApp an overall experience for people.
The new partnership is a great way and opportunity for businesses to connect with each other. The new Whatsapp payment model can help everyone to play each other with the use of WhatsApp. On the other hand, verified business models can become a leading part of the WhatsApp Business group. The beta service helps all business ventures to connect with their users and customers.
The WhatsApp Business application is free to download for all. It helps everyone to connect with each other and engage or extend their business. The freemium business model is said to change in the future.
As of now, no one understands how much revenue Whatsapp makes from its parent company. Both the companies are different from each other. Their revenue models are entirely different and that too, the structure through which the money is made is apart.
According to a Form 10-Q, WhatsApp generated a revenue of $1.28 million. But it was completed way back. At that time, WhatsApp was charging around $1 fee for users to get the premium model.
Recently, Forbes had predicted that WhatsApp’s average revenue per user would be $4 by 2020. By the estimates and the number of users registering, the company could be making 4 billion per quarter.
In 2017, another estimate stated that the company could be making ranging from $5 billion to $15 billion, with the average revenue per user ranging from $4 to $12.
Whatsapp has a huge potential of making a lot in respect of revenue over the coming ages. But with the recent security options in check, a lot of users are withdrawing their usage from the app and shifting to other channels.
Thank you for reading the entire article. If you like this article, do share it with your friends!
Idea Usher is a pioneering IT company with a definite set of services and solutions. We aim at providing impeccable services to our clients and establishing a reliable relationship.
© Idea Usher. 2019 All rights reserved.