WhatsApp monetizes depends on the cooperation with Jio.
Editor’s note: This article is from the micro-channel public number “Chi as the network” (ID: passagegroup) , Author: Du Zhanyu.
After more than a year of tossing, WhatsApp’s advertising business has not made substantial progress.
Originally, the company had high hopes for the advertising plan.
With Facebook as a backer, you do n’t have to worry about not making money. Relying solely on the advertising business, it is expected to realize billions of dollars in revenue each year. However, the unlucky day, the advertising plan originally scheduled to launch in 2020, has encountered changes in the middle.
Last autumn, the company had planned to announce the details at an internal sales meeting in Singapore. However, after meeting with Zuckerberg, Will Cathcart, the new head of WhatsApp, poured cold water on the employees, and he announced the suspension of the advertising plan.
Informed sources said that the reason why Zuckerberg pressed the pause button is that he did not want to anger the regulator. On the other hand, they also don’t want to anger WhatsApp users. WhatsApp users attach great importance to privacy, and all along, they have been deeply concerned about the binding of WhatsApp and Facebook accounts.
The time is delayed, but the plan to introduce ads for WhatsApp has not changed. Zuckerberg intends to integrate the company’s three major platforms-Facebook, WhatsApp and Instagram, and then advance this plan. Although this large interoperability project may take several years, but through resource integration, WhatsApp will become more adept in advertising in the future.
Of course, Facebook suspended WhatsApp’s advertising plan, which disappointed investors to some extent. However, this also shows from another level that the unprecedented scrutiny of the regulatory authorities has had a considerable impact on the business of this social media giant.
In recent years, a series of privacy scandals have sapped Facebook ’s reputation among lawmakers and consumers. Last summer, the US Federal Trade Commission issued a $ 5 billion fine to Facebook, and regulators have been watching Facebook and constantly evaluating its size. Some media reported that they are trying to stop Zuckerberg’s interoperability plan. Notable critics, including Facebook co-founder Chris Hughes and Senator Elizabeth Warren, said the company should split the two big projects, Instagram and WhatsApp.
RegulationInstitutional scrutiny has gradually increased, and senior Facebook policy officer Nick Clegg has warned executives that regulators have been highly vigilant that Facebook collects data from WhatsApp users, and they may be concerned about advertising programs that involve both businesses. Express doubts.
Once the integration is complete, WhatsApp ’s advertising program will re-engage the interest of executives. They hope that Facebook will solve all the regulatory troubles at once, rather than passively responding time and time again. Of course, Facebook leaders also hope that people will show mercy.
Now, the new coronavirus pandemic forces people around the world to hide at home. The use of Facebook services, especially WhatsApp, has skyrocketed. At the same time, corporate marketing budgets have been greatly reduced, advertising costs have fallen sharply, Facebook has lost its core advantage of social networks, and Instagram’s revenue has also greatly reduced.
If Facebook ’s cash flow continues to shrink, then WhatsApp may face more revenue pressure in the coming months. Although WhatsApp has had some monetization attempts, such as letting companies provide services to customers through text messages, it has always had limited appeal.
The farthest distance in the world
About six years ago, Facebook ’s own messaging service was just getting started, and Zuckerberg wanted to see growth. Later, the company acquired WhatsApp, which had only 60 employees at the time. This small, savage company was firmly rooted outside the sphere of influence of the Facebook empire and won the trust of a large number of users. Although, initially, people just regarded it as a substitute for mobile operators’ short message service.
“This is the only app we have seen that is more used than Facebook.” Zuckerberg said when he announced the acquisition of WhatsApp in early 2014.
In the first three years after the acquisition, WhatsApp accidentally took the cold bench. Fortunately, this has not affected WhatsApp’s popularity. Its user base has expanded from 450 million in 2014 to 2 billion earlier this year. It is very popular in Western Europe, India, and even the world. In contrast, Facebook itself No matter where, Messenger has a very low presence.
Fundamentally speaking, WhatsApp and Facebook are completely different in temperament.
Even their cooperation is full of violations.
The two co-founders of WhatsApp, Jan Koum (Jan Koum) and Brian Acton (Brian Acton), are both kind of “integrity who bother to advertise and do not intend to collect user data”But Facebook is much smarter, and most of the company’s funds come from precision advertising. Koum said that they grew up in the Soviet Union, a poor Ukrainian family, naturally have a lingering fear of government supervision.
In 2011, Qum sent a tweet expressing his aversion to advertising. “Yes! Advertising gives us money to buy cars and clothes, so we still have to do what we hate and buy shit that we do n’t even need!”
Even after the acquisition, Qum and Acton desperately demarcated the company from the rest of Facebook. For example, leaving WhatsApp in an independent office in Mountain View, California, a few miles away from Facebook ’s headquarters, Ropark. Unlike Instagram, another important app acquired by Facebook, WhatsApp is a subsidiary of Facebook and maintains some independence. This means that when employees are hired or transferred from other Facebook departments, they must be signed by WhatsApp.
In early 2017, the status function of WhatsApp was first launched, which established a good foundation for the introduction of advertising in the future. This feature allows users to post photos and videos, but these photos and videos can only be kept for 24 hours. In the integration plan, Facebook plans to use Status to add ads to user-generated photos and videos. It is expected that this delivery method will attract marketers who intend to speculate on the user’s preferences based on the user’s Facebook content and tailor ads for them. As of 2018, WhatsApp’s Status feature has 450 million users, while Instagram’s Stories has 400 million users.
Putting ads on WhatsApp, privacy policy is a key obstacle. Initially, the WhatsApp privacy policy specifies how the collected data will be used. Although users tend to skip this content, regulators cannot miss it. When Facebook acquired WhatsApp, it had agreed that if you want to change the use of WhatsApp’s user data, you must first obtain the user’s consent.
However, it did n’t take long for Facebook to bring WhatsApp down. In 2016, WhatsApp began to share data such as user report emails with Facebook. The move angered European regulators and imposed a fine of 110 million euros on Facebook on the grounds that the company had promised not to open the app when it acquired WhatsApp. In order to deal with the regulatory agency, in the subsequent advertising of other Facebook services, they have never used the phone numbers of European WhatsApp users.
This penalty has little impact on Facebook, but it is significant. This heralds the regulator ’sThe company’s growing market influence is worrying.
Intensified tension
At the urging of Zuckerberg and Facebook ’s number two Sandberg, WhatsApp began preparing for the advertising business in the summer of 2018.
Because of the advertising plan, the two co-founders of WhatsApp clashed with Zuckerberg and Sandberg, and then left. Qum left shortly after the announcement of the plan, and Acton was as early as the previous year. He left early in the gestation phase of the plan, not even a stock award.
By the beginning of 2019, WhatsApp employees had made a complete business plan. According to sources, the plan predicts that within a few years, the advertising business will generate billions of dollars in revenue. In May 2019, at a meeting of Facebook marketers in Europe, WhatsApp presented its simulation of advertising to participants.
WhatsApp messages are encrypted, and user data is basically not collected. However, due to policy changes in 2016, Facebook got the phone number data of WhatsApp users. Not only that, the company also plans to match the numbers of WhatsApp users with their personal Facebook profiles. Insiders said that if the numbers of WhatsApp users match their corresponding Facebook profiles successfully. Facebook will use the user behavior and interests it knows to personalize the advertisements that users see on WhatsApp.
Of course, if WhatsApp users do not improve the Facebook profile of the same number, or choose to opt out of Facebook ’s target positioning, then the users will see only ordinary ads.
Through 2019, the Facebook and WhatsApp teams have been arguing about whether to update the App ’s privacy policy. Facebook executives worry that once WhatsApp users realize that there is a connection between the two, they will delete their Facebook accounts.
Facebook ’s head of global communications and public policy, Clegg, once said that he was unable to sell advertising integration plans to regulators, and the company is facing increasing pressure. Last year, the Federal Trade Commission, the Department of Justice, legislators in Congress and the Union of State Attorneys General announced an antitrust investigation against Facebook.
When asked about WhatsApp ’s decision to stop advertising, Acton co-founder Acton said in an email that he had left because of this incident. Who knows that Facebook has abandoned it .
Acton is now the executive chairman of the non-profit organization Signal and is operating aThe encrypted message application of the same name.
Limited income
In recent years, as Facebook ’s cash cow News Feed ’s revenue growth has slowed, it has become more urgent to develop revenue strategies for WhatsApp. Executives have considered several ideas for making money from messaging services, including putting games into applications, and charging companies. It seems that there are many ideas, but most of them are difficult to take up.
Another potential source of income is WhatsApp payment. Although the feature has not been officially launched, it has been opposed by regulators in India ’s largest market, WhatsApp. WhatsApp does not collect commissions from transactions between users, but only provides cost subsidies to participating banks.
WhatsApp’s main source of income is still short messages, allowing companies to provide services to customers through short messages. For small businesses, this feature is free. For larger companies, each message sent to customers will be charged a few cents. WhatsApp did not disclose income, but a person familiar with the situation said that last year it earned less than $ 1 million in monthly income.
Since the pandemic of the new coronavirus, WhatsApp has been providing free services to the government and non-profit organizations such as the World Health Organization. These organizations will send short messages to the public to help people understand the virus.
In an interview with The Information last month, WhatsApp’s Cathcart stated that free news given to the government and health organizations accounted for a “double-digit percentage” of business news usage.
Earlier this week, Facebook revealed another WhatsApp monetization plan. It had invested $ 5.7 billion in Indian company Jio Platforms with a market value of $ 66 billion. Zuckerberg took a fancy to Reliance Jio, its telecommunications division. Potential, Facebook will work with Jio to allow Indians to use WhatsApp to find and buy goods from local sellers.
When talking about WhatsApp’s advertising plan, a Facebook spokesperson said in a statement, “Advertising in Status is still a long-term opportunity for WhatsApp, and we believe this will be a good way to start advertising in the future.” / p>
Supervisors are following
In early 2019, Zuckerberg asked the Messenger team to implement the integration plan. If the plan is successfully completed, it will allow users to interact between the various platforms. At the time, the engineers assessed that the plan would take at least two years to complete. Currently, the project is still in the early stages, and engineers will first simplify the platformCode, and then realize the interconnection between the platforms. Insiders said that integrating WhatsApp may be more difficult than Facebook and Instagram, because WhatsApp’s encryption technology is very complicated.
Although Facebook executives said that connecting their applications can improve the user experience, opponents also said that this may make the regulators more confident when establishing antitrust cases.
Dina Srinivasan, the former advertising director, has now turned into an antitrust scholar and wrote a paper entitled “The Antitrust Case Against Facebook.” A trick that cannot be split, they have been trying to combine their platforms in some way.
Last year, Zuckerberg decided to put the word “from Facebook” under the logos of Instagram and WhatsApp. People think this is an attempt by Facebook to improve the brand reputation. According to people familiar with the matter, Facebook is currently formulating a unified privacy policy. At that time, the company will connect all applications, and users can send information between these applications.
While Facebook is working hard to get its apps underway, the authorities are also beginning to review the company ’s dominant market position. The Justice Department has been interviewing Facebook competitors to understand their views on Facebook. Although government personnel have struggled to adapt to remote work, even if the progress is slow, they will not give up supervision of the technology giant.
(This article is compiled from foreign media reports)