Brief:
- WhatsApp, the Facebook-owned messaging app with 1.5 billion users worldwide, will start showing ads after being ad-free for years, according to India's Economic Times. WhatsApp VP Chris Daniels said the ads will appear in the mobile app's "status" section, which features Stories-like posts that disappear after 24 hours.
- Daniels didn't say when WhatsApp will start displaying ads. Facebook in August had first detailed plans to sell ads and to charge large companies that use WhatsApp to chat with customers as part of a plan to monetize the platform.
- Ads will be WhatsApp's primary monetization driver, Daniels said. The app has been free for users since 2016, when the service dropped its $1 annual fee after the first year of using the service.
Insight:
WhatsApp's plans to start selling ad space will give mobile marketers another channel to reach the 450 million people who use WhatsApp Status, which was launched earlier this year and mimics the popular Stories format originated by Snapchat and copied with great success by Instagram and other platforms. Facebook acquired WhatsApp for $19 billion in 2014. While the messaging app's co-founders Brian Acton and Jan Koum were historically averse to ads on the platform, the strategy will now become part of parent company Facebook's marketing arsenal. Acton and Koum left Facebook separately in the past 14 months.
Facebook is putting greater emphasis on the "Stories" format that's popular with users, but whose video ads are less lucrative on a per-minute basis than its News Feed, Facebook CEO Mark Zuckerberg told analysts. "People feel more comfortable being themselves when they know their content will only be seen by a smaller group and when their content won't stick around forever," he said. "Messaging and Stories make up the vast majority of growth in the sharing that we're seeing."
Similarly, Instagram was once ad-averse, but since Facebook acquired the platform for $1 billion in 2012, it's become a major marketing platform with 2 million active advertisers. Mobile ad monetization on WhatsApp could grow increasingly important as Facebook struggles with slowing sales growth. Facebook this week reported a 33% increase in revenue to $13.73 billion for Q3 2018, missing the average analyst estimate of $13.77 billion. The growth rate was the company's lowest in six years.
Instagram co-founders Kevin Systrom and Mike Krieger resigned in September, spurring uncertainty about the future management of the image-sharing app. Announcements since then provide a greater indication of Facebook's plans for Instagram. The app this week started rolling out a "promote for stories" ad format that lets business pages show the disappearing slideshows, per TechCrunch, pointing to how Facebook may place increasing emphasis on WhatsApp and Instagram for monetization as users continue to flee Facebook's core platform.
