The new Facebook Meta rebrand logo is seen on a smartphone in front of the Facebook, Messenger, Intagram, Whatsapp and Oculus logos displayed in this illustration photo taken on Oct. 28, 2021.
Given Ruvic | Reuters
WhatsApp is already widely popular with American consumers. Now Meta Platforms is paying more attention to building its small business base.
Parent company Facebook launched WhatsApp Business in 2018 with free and simple tools to help small businesses stay in touch with customers, offering a way for them to interact directly, search for products and show interest in buying.
The company will soon introduce a premium service for small businesses and is doubling down on a newer advertising format called click-to-message, which allows consumers to click on a company’s ad within Facebook or Instagram and start a conversation directly with that business on Messenger, Instagram or WhatsApp.
These initiatives provide Meta with the ability to increase advertising revenue, stay relevant with small businesses and earn additional revenue from premium services offered, analysts said.
Keeping more within the Meta universe
Meta (then Facebook) bought WhatsApp in October 2014 for about $22 billion. Since then, industry watchers have been watching closely for signs that the company plans to monetize the platform more. That time could come now.
“If I’m standing on one of Meta’s properties and I’m communicating using Meta, asking questions and making purchases — all within the platform — there’s no signal loss and it’s easier for Meta to show the brand its return on advertising . spend,” said Mark Kelley, managing director and senior equity research analyst at Stifel. “Signal loss is really what has affected social media companies this year.”
WhatsApp will be the “next chapter” in the company’s history, 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 a broad audience and “scale monetization” after achieving that goal. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, where business messaging and commerce is 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 reported a loss in revenue and earnings and forecast a second straight quarter of declining sales. Meta Platforms shares have lost roughly half their value this year. Mark Zuckerberg is betting huge sums of money, currently at a loss, on a future in which the metaverse will be a growth driver for the company. But with his bet on the metaverse up to a decade before it came to fruition, Meta’s CEO has emphasized that in the short term it is WhatsApp that is among the initiatives to focus on for growth.
WhatsApp Business has two components. There is WhatsApp Business app for small businesses. There is also the WhatsApp Business platform, an API, for larger businesses such as banks, airlines or e-commerce companies. The first 1000 conversations on the platform each month are free. After that, businesses are charged per conversation, which includes all messages sent in 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 business hours, for example, with information about the business, such as a menu or their company location. Businesses can use it to send pictures and product descriptions to customers as well as other information they may be interested in. Currently, there’s no option to pay through WhatsApp, but it’s a feature Meta is considering, a company spokesperson said.
Premium features for small businesses – rolling out in the coming months – will include the ability to manage chats across up to 10 devices, as well as new customizable WhatsApp click-to-chat links to help businesses attract customers to their online presence, the company said in its blog.
“We think 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 spokesperson said.
Why Main Street business is a focus for WhatsApp push
Analysts see a wide potential. “Messaging is an international forum that everyone uses on an ongoing basis. It’s massive and growing,” said Brian Fitzgerald, managing director and senior equity research analyst at Wells Fargo Securities.
There is significant room for growth in the U.S., where WhatsApp is still “a largely untapped resource for small businesses,” said Rob Retzlaff, executive director of the United Trade Council, a nonprofit that promotes business access to minor in digital technologies. and tools.
This is something Meta sees changing over time. “We strongly believe that this behavior will continue to grow around the world,” said Sheryl Sandberg, the company’s chief operating officer, on the July 27 second-quarter earnings call. The company estimates that 1 billion users are messaging a business every week on WhatsApp, Messenger and Instagram.
The need for free and low-cost digital tools for small businesses is underscored by a 2021 report from the Affiliated Commerce Council. The report noted that about 11 million small businesses would have closed all or part of their business if not for the digital tools that allowed them to continue operating.
A driver for Meta in promoting WhatsApp Business is advertising revenue. “Click-to-message is already a multibillion-dollar business for us, and we continue to see strong double-digit growth year over year,” Sandberg said on the second-quarter earnings call. “Click to message is one of our fastest growing ad formats for us,” she added. The company does not disclose how much business comes from WhatsApp versus Messenger or Instagram.
Businesses like this format because it’s “an inexpensive way to interact [with consumers] it feels a little more personal,” Kelley said.
Let’s say, for example, a customer sees 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. “No one [else] the world knows I bought these sneakers and there’s a direct business-to-consumer connection.”
Additionally, by offering premium services, Meta can increase revenue, at least incrementally, 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 the ability to use it on multiple devices.
But Geraldine Colocia, community manager at Someone Somewhere, a certified B corporation that partners with hundreds of artisans across Mexico, isn’t sure. She has used the free version of the app for more than two years and would consider paying for it, but the decision will turn on current features and pricing, she said.