Meta is doing it again, this time on WhatsApp.
To Investors,
My WhatsApp just turned green. WTH??
In recent months, WhatsApp has been slowly introducing a few features aimed at enhancing user experience and, undoubtedly, keeping us all engaged on the platform. Meta is running the same playbook from Instagram and Facebook, this time on WhatsApp. I’ll take you through how I got there and explore some lessons I picked up.
For 2 billion people (1⁄4 of the world population!) WhatsApp has become a staple tool for messaging people we know and for general social interaction. I think that our WhatsApp turning green with no announcement is an anchoring technique to make us look closer at the app.
Over the past couple of months Communities was introduced to WhatsApp - a feature that allows people to organise their WhatsApp groups in one place.
After that the platform gave us Channels - a tool that businesses can use to broadcast messages to a large audience.
And most recently Meta AI was introduced to WhatsApp, an “AI assistant developed by Meta that can understand and respond to human input in a conversational manner.”
These additions signify more than just convenient tools; they represent a strategic effort to enrich user interactions while laying the groundwork for ramping up monetisation opportunities for the golden goose - WhatsApp Business.
By providing free access to these new features, WhatsApp entices users to spend more time on the platform, ultimately benefiting WhatsApp Business because the platform becomes solidified as a fixture in our lives the more time we spend on it.
I asked Meta AI on WhatsApp to introduce me to the best sushi restaurants in Durban…
The response from Meta AI was quick and reasonably good. The contact numbers were not real/not linked to the businesses however, but its early days and this is a small example of what we can expect in the way of convenience as users.
How is this good for WhatsApp Business?
Well parent company Meta is in the business of monetising data. In 2023, between Instagram, Facebook, and WhatsApp, Meta generated $133 billion in revenue through leveraging user data for targeted advertisements. WhatsApp reportedly contributed only 1% of that.
Currently WhatsApp Business is empowering small businesses to scale, and will make it easier to shop through chat, and is enabling us to access essential services like payroll and HR information.
While we use Channels, Meta AI, and interact with businesses on WhatsApp, data is being collected on our engagement on the App.
Will we start seeing ads on WhatsApp? Highly likely.
And that makes sense because firstly let's not forget that Meta is a for-profit and they need to eat.
Secondly, remember the adage that says: "if you're not paying for the product, you are the product"? In 2021 it was announced that WhatsApp would start sharing data within the Meta Family of Apps. Can you see the pattern resembling Facebook and Instagram?
That said, ads probably won’t be fed to us in the same manner because our engagement on WhatsApp is driven by chat, rather than views. Therefore, we might get messages from businesses we’d be interested in and from businesses we’ve interacted with based on the data that Meta has collected from our chats.
So, what can you learn from Meta as a platform builder?
1. Get them through the door (Accessibility)
Every paid service has a free feature that draws people in. Or make the whole thing “free.”
2. Make them stay (Innovation)
Offer value so that leaving is difficult. WhatsApp did this first through a cheap, quick-messaging service, then with social interaction through stories, and now with Communities, Channels, and Meta AI.
3. Make the product self-sustaining (Monetisation)
The trick here is striking a delicate balance between accessibility, innovation, and monetisation.
WhatsApp would be terrible with ads like what we see on Instagram, but you also can’t lose that accessibility by making WhatsApp a paid service.
Remember also that another reason that we love WhatsApp is the feeling of privacy we get from the message below which is plastered before every chat.
In contrast we feel watched when we see ads on Instagram and Facebook.
But the users are there on WhatsApp so Meta needs to leverage that. The best way for Meta because they’re undefeated at it is to offer a B2B tool - i.e WhatsApp Business monetised through targeted advertisements and platform fees.
It will be fascinating to see how WhatsApp grows and evolves, and the contribution it will make to Meta’s Family of Apps.
I hope you enjoyed this letter.
One the journey to becoming a master capital allocator - one lesson down, a billion more to go.
Respectfully,
-Mansa
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Disclaimer: this note is not financial advice and is for informational and entertainment purposes only. We may hold positions in the companies discussed. Do your own research.