How does WhatsApp make money?

Whatsapp statistics 

  • More than a billion people use WhatsApp every day.
  • There are a total of 1.3 billion monthly active users on WhatsApp.
  • An average user sends 1,200 messages per day. 
  • 200 million voicemails are sent via WhatsApp every day. 

Whatsapp is a free mobile and web-based instant messaging application or service used to send and receive text and voice messages, voice calls, media and video calls. 

The app launched in January 2009, was acquired by Facebook in 2014 for $ 19 billion and reached a user base of 1 billion in 2016. 

The Whatsapp app works on iPhone, Android and other smartphones, including the web-based desktop version. 

Messages sent through the app are end-to-end encrypted, which means that no one but the sender and recipient can read the messages. 

How was WhatsApp born? 

Jane Kaoum and Brian Acton are the founders of this WhatsApp instant messaging application. 

Before the founding of Whatsapp in 2009, both founders worked in Yahood for 9 years.  

Brian Actor revealed how they both got rejected by Facebook when they applied for a job in 2009. 

After buying the iPhone, the founders realized that there is an opportunity in this untapped market.  

The first released version of WhatsApp wasn’t even called to be a messaging application. 

Users can only update their statuses that other people connected to their network can see. WhatsApp gained momentum after Apple launched push notifications in June 2009. 

This push notification was about users getting a ping every time someone on their network updated their status.  

The WhatsApp messaging feature was introduced as version 2.0 of WhatsApp, where it has successfully managed to increase users to over 250,000. 

In early 2011,  WhatsApp became the top 20 of Apple’s App Store apps. It was then that the potential of the application began to take shape. 

An increase in the popularity of the application has attracted more and more investors interested in the founders of WhatsApp. 

But the founders weren’t interested in that business and resist because they wanted to create an ad-free app dedicated to users. 

Initial income generation strategy 

One of the main reasons behind the creation of the app was the annoyance with in-app ads. 

Since they haven’t always liked ads, they were in favor of ad-based monetization for WhatsApp. 

However, in 2011 WhatsApp accepted $ 8 million from Sequoia Capital with the certainty that the application will remain ad-free. 

By February 2013 alone, the app had grown to around 200 million active users, where Sequoia invested another $ 50 million in a $ 1.5 billion valuation.

Now,  how did WhatsApp initially make money without advertising?

Whatsapp business model – How WhatsApp Makes Money

WhatsApp makes money in its early days by relying on the popular freemium business model. The app was free to attract more users and then charge the $ 0.99 annual subscription fee to continue the service. 

facebook acquired whatsapp - whatsapp pay

How did you acquire Facebook Whatsapp? 

Facebook bought WhatsApp for $ 19 billion in 2014, which is the largest acquisition Silicon Valley has ever seen. 

At the time of the acquisition, WhatsApp had more than 450 million monthly active users worldwide.  

$ 4 billion in cash and the remainder $ 12 billion is owed to WhatsApp asking for Facebook stock in the acquisition. 

Facebook paid the gigantic sum of $ 19.6 billion followed by an additional $ 3.6 billion to compensate WhatsApp employers for staying on board. 

Facebook’s acquisition of WhatsApp not only helps Facebook maintain its dominance in the digital market, it also benefits WhatsApp in great ways. 

Like Facebook’s acquisition of Instagram, here too the acquired part, WhatsApp comes to have a significant and considerable operational advantage to thrive in the future. 

The instant win wasn’t for Facebook or WhatsApp, but for Sequoia Capital, which made $ 3 billion on an investment of around $ 58 million. 

The founders of WhatsApp accepted this agreement because they did not have to compromise any of their principles or vision of the app. 

The founders proudly hailed that WhatsApp remains autonomous and works independently.  

Neither would they change their initial principle of “no advertising-based monetization” at any time after this acquisition.  

So WhatsApp or Facebook didn’t have to compromise on their vision, product or goal to make this deal happen.

When was WhatsApp free for all users?

In 2013, on July 13, Whatsapp was introduced and available for free use, but with an annual subscription of $ 1 starting at 1 year. 

But, in January 2016, the messaging app went free for all users. They have decided not to charge $ 1 for their annual subscription anymore. 

The founders of WhatsApp presented a new monetization vision for the application as a connection with other companies and organizations. 

They basically mentioned how WhatsApp can offer its services to work-related companies for their communication with end users. 

Once again it has been made clear that WhatsApp will not seek third party ad integrations to monetize the app. 

Why doesn’t WhatsApp sell ads? 

WhatsApp’s revenue model is not based on advertising. You do not earn any income by running ads. 

According to the WhatsApp blog, the founders of the application hated the announcement as it hinders user accessibility and comfort. 

They wanted to create an ad-free communication platform to provide a great experience and a simple interface. 

The idea behind WhatsApp was to cater to end users rather than large companies to place their ads. 

However, to make it sustainable, they eventually decided to charge $ 1 for the paid version of the app. 

The annual fee of $ 1 per user was all they charged for WhatsApp. 

Does WhatsApp sell your data to companies? 

According to the main speculations, database management could be the main source of income generation for WhatsApp to make money without advertising. 

Most likely, WhatsApp is backing up all conversations made on the platform on its servers. 

Conversations reflect interests, likes, dislikes, preferences, ideologies, opinions, and more in consumer behavior and psychology. 

This information is invaluable to the giant companies that develop, offer, and target certain customers. 

This information helps personalize the product, develop a more effective sales and marketing strategy, and connect with customers on a more personalized level. 

WhatsApp has the largest user base than other competing messaging platforms, including some social media platforms. 

Therefore, selling information to large companies can generate a huge cash flow that adds to your income. 

However, the fact that WhatsApp uses user data to generate revenue is pure speculation. There are no such reports, advertisements or evidence to support this. 

Also, WhatsApp is not available for advertising marketing, as they have clearly stated since its inception.  

WhatsApp CEO Jan Koum also stated that WhatsApp is made for instant messaging, so ad placement will affect its sole purpose. 

Delete the data management revenue model.  

whatsapp business api - whatsApp to expand WhatsApp Pay in the near future

How does WhatsApp make money now?

There are two main sources for making money with WhatsApp: 

  1. WhatsApp API for business – Whatsapp business api
  2. Clicks on WhatsApp ads

The WhatsApp business app is free for business owners and brands, however the business API functionality is monetized. 

Tech giants and brands like Netflix use WhatsApp’s business API to communicate with their customers. 

API WhatsApp Business

WhatsApp charges for slow responses to these registered companies. Businesses can respond to their customers’ messages for free, but only for up to 24 hours. 

For each delayed message, a small fee charged by WhatsApp varies demographically. 

Customers prioritize WhatsApp to communicate with businesses as it tends to be faster and easier and they get quick responses as well. 

WhatsApp starts charging more after a certain message threshold or limitation once customers and businesses get used to using WhatsApp for their primary communications. 

WhatsApp Ads

WhatsApp also makes money through clicks on WhatsApp ads. Now these ads aren’t what you see on Facebook or WhatsApp. 

These ads serve in particular to redirect Facebook users to WhatsApp. 

Since these ads don’t show up on WhatsApp, it’s definitely not a major or significant source of income for them, but definitely one of them. 

It’s also a way Facebook leverages WhatsApp to create another source of income. 

How much money does WhatsApp make? 

Facebook is the parent company that owns WhatsApp. 

Since they never share their income breakdown or annual income reports with the public on any product, there is no data on their actual income. 

However, according to the 2014 Form 10-Q, the meager revenue generated by WhatsApp was $ 1.28 million, but that was a long time ago when they charged $ 1 per user after a year.

One of the other speculations on WhatsApp’s total revenue concerns the Forbes forecast. 

They predicted that the average revenue generated by WhatsApp per user would be $ 4 by 2022, which could push Facebook to reach $ 5 billion in revenue. 

However, the forecast did not go well, as WhatsApp acquired a total of 1.3 billion monthly users in mid-2017, which is expected to arrive in 2022. 

So Forbes redid its November 2017 revenue estimate for WhatsApp and predicted it would go from $ 5 billion to $ 15 billion. 

They also estimated that the average revenue per user ranged from $ 4 to $ 12. 

Forbes’ latest estimate of $ 5 billion to $ 15 billion in 2017 considering the generous increase after years, considered the best guess so far. 

Why can’t WhatsApp earn more than Facebook? 

Compared to Facebook, which is a popular social media site, WhatsApp is still just a mobile application, so it can’t earn as much as Facebook. 

Furthermore, this makes it difficult for ads to appear on the WhatsApp mobile app. 

Technically, WhatsApp has the potential to generate more revenue than Facebook because users tend to spend more time on WhatsApp than on Facebook. 

In terms of the average time spent on WhatsApp, it beats any other social media website or app. 

So according to this, more advertisers should focus on serving ads on Whatsapp. 

And as more and more people use the web version of Whatsapp on their desktop, you can get more space to view more numeric ads than Facebook.