It appears that Facebook has finally settled on how to make money with its massively popular WhatsApp messaging system, for which it paid an eye-popping $19 billion three years ago. It's an idea that takes a cue from what Facebook is doing with its similar Messenger app, as Reuters reports:
WhatsApp, the Facebook-owned messaging service used by more than 1 billion people worldwide, is testing a system that would let businesses talk directly to WhatsApp users for the first time, according to communications about the project seen by Reuters.
WhatsApp, a pun on the phrase "What's up?", has helped to upend mobile services by allowing users to text or call friends and family for free, without text message charges. It competes with similar services such as WeChat, a unit of China's Tencent Holdings Ltd.
One potential revenue source is to charge businesses that want to contact customers on WhatsApp. But the company is working carefully to avoid problems with spam messages, the documents show.
Last month WhatsApp struck a deal with Y Combinator, which provides training and advice to startups that show potential, to have a small number of companies take part in an early trial, according to emails and messages posted on a Y Combinator forum.
Facebook Messenger, which also has 1 billion users, already ways for businesses to interact with customers, including through the use of specialized bots. One called Spring is a personal shopping assistant, and another from CNN delivers users curated news reports.
Delivering value while also highlighting your brand is where sales, marketing and customer support leaders need to strike a crucial balance, and WhatsApp needs to deliver the right framework to support that.
"It’s always a delicate balance when you mix consumer and business applications," says Constellation Research VP and principal analyst Alan Lepofsky. "On one side, it provides value to customers as they can interact with brands in context of a conversation. For example, friends may communicate directly with a restaurant to make dinner plans. On the other side, consumers don’t want to be overly pestered by brands, especially if ads are pushed that are not relevant."
WhatsApp signaled its intentions of the business model shift in early 2016. In a blog post, the company wrote:
The answer is no. Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from. That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam.
There are other novel ways businesses could use WhatsApp, as the Reuters report notes:
The trial is still in the early stages, said Umer Ilyas, co-founder of Cowlar Inc, one of the startups involved. The system is highly anticipated in remote places where WhatsApp is especially popular, he said.
Cowlar makes collars for dairy cows, collecting data on their activity and recommending changes to improve milk yield. The company, which is testing the collars in the United States, wants to use WhatsApp to send automatic alerts from the collars directly to farmers if say, a cow is not behaving normally, Ilyas said.
"It represents a huge opportunity, because in all the big dairy markets - India, Brazil, Pakistan - a lot of farmers have access to WhatsApp," he said in a phone interview.
The Bottom Line
This is an important development for sales, marketing and customer service organizations to monitor. WhatsApp is much more popular than Facebook Messenger in many countries, particularly in the BRIC countries. Together, Messenger and WhatsApp have more than 2.2 billion users. That's an astoundingly large audience waiting to be served in the proper way.
While SMS remains the top messaging type, Messenger and WhatsApp can deliver a much richer experience to customers, and in turn more dividends for businesses. Spam has plagued SMS for years and it has no place in next-generation messaging apps. It's up to WhatsApp and Facebook to police businesses that choose to tap the services, and on businesses to focus on innovative ways to benefit and communicate with their customers. Watch this space.
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