Brief:
- Facebook scrapped a controversial plan to sell ads in WhatsApp, the messaging app with more than 1.5 billion users worldwide, The Wall Street Journal reported, citing people familiar with the matter. WhatsApp in the past few months broke up a team it had formed to integrate ads into the app, which Facebook acquired for $22 billion in 2014 but has yet to monetize with ads.
- WhatsApp plans to eventually sell ads on Status, a feature resembling Instagram Stories that lets users create posts that disappear after 24 hours, unnamed sources told the Journal. For now, WhatsApp is focused on other monetization plans, such as communications services for businesses that connect with customers through the app, a source told the Journal.
- WhatsApp launched in 2009 as an ad-free messaging service that first collected a one-time download fee and later charged $0.99 a year. After buying WhatsApp, Facebook eliminated those fees. The social network in 2018 announced a monetization plan for the app that included ad sales.
Insight:
Facebook's reported retreat from planning to sell ads on WhatsApp is somewhat limiting to mobile marketers that considered media buys on the messaging platform, which has a global scale that few other apps have achieved. There's still the possibility that WhatsApp will have ad inserts in Status, but those plans are currently unclear. WhatsApp can still be an important marketing channel for businesses that show in-app product catalogs and automate customer service functions typically handled by expensive call centers.
The initial plan to sell ads was controversial among WhatsApp users and inside the company. Consumers fretted over privacy issues and the possibility that ads would interfere with the user experience (UX). WhatsApp's founders, Jan Koum and Brian Acton, were major advocates of user privacy and resigned from the company amid disagreements surrounding Facebook's plans to sell ads in the messaging app, The Wall Street Journal reported in 2018. Privacy issues have dogged Facebook for years, culminating in a record $5 billion fine in a legal settlement with the Federal Trade Commission that required the company to provide better user protections.
Facebook's ad sales are still surging, removing some of the broader company's pressure to monetize WhatsApp with advertising. Ad revenue climbed 28% to $17.4 billion in Q3 2019 from a year earlier, while daily active users (DAUs) had expanded by 9% to 1.62 billion. The company has sought to diversify its revenue with a bigger push into e-commerce, including expanded shopping features in Instagram.
