Meta and the reason why Mark Zuckerberg made a big bet for business on WhatsApp

WhatsApp is already popular among US users. Now Meta Platforms is paying more attention to building its small business base.

Facebook’s parent company launched WhatsApp Business in 2018 to help small businesses connect with customers, interact directly, search for products and show interest in purchasing.

Recently, the company is offering a premium service for small businesses, and is doubling down on a new ad format that allows users to click on a company ad on Facebook or Instagram and start a live chat. That business on Messenger, Instagram or WhatsApp.

These initiatives will give Meta the ability to increase advertising revenue, stay engaged with smaller businesses and generate additional revenue from premium services offered, analysts said.

More retention in the meta universe.

Meta (then Facebook) bought WhatsApp for $22 billion in October 2014. Since then, industry watchers have been watching closely for signs that the company plans to monetize the platform more. That time may come now.

“If I’m staying on any Meta property and I’m interacting with Meta, asking questions and buying — all within the platform — there’s no loss of signal, and it’s easy to tell Meta to go back to the ad. They’ve passed,” said Mark Kelly, managing director and senior equity research analyst at Stifel. “What’s impacting social media companies this year is signal loss.”

Meta CEO Mark Zuckerberg recently told CNBC’s Jim Cramer that WhatsApp will be “the next chapter” in the company’s history. He pointed out that the company’s “playbook over time” is to build a service that serves a large audience and “expand revenue generation” after reaching the goal. “And we did that with Facebook and Instagram. WhatsApp is really going to be the next phase, business messaging and business is a big thing there,” he said.

This meta message comes at a time of transition for the company and uncertainty among investors. The company recently reported revenue and earnings shortfalls and forecast a second quarter of sales declines. Meta Platform’s shares have lost nearly half their value this year. Mark Zuckerberg is betting big on bankruptcy and that Metaverse will be the engine for his company’s growth. But with his bet on Metaverse a decade before its end, Meta’s CEO emphasized that WhatsApp is among the initiatives focused on growth in the short term.

WhatsApp Business has two components. There is also a WhatsApp Business app for small businesses. For larger businesses like banks, airlines or e-commerce companies, there is also the WhatsApp Business Platform, an API. The first 1,000 conversations on the platform each month are free. After that, businesses pay per conversation, which includes all messages sent in a 24-hour period, based on the region level.

With the free app, small businesses can communicate directly with customers. You can set up automated messages to respond to customers after business hours, for example with information about the business such as the menu or their company location. Businesses can use it to send product images and descriptions to customers, as well as other information they may need. There is currently no ability to pay with WhatsApp, but Meta is a feature that is being considered, a company spokesperson said.

Premium features for small businesses — which will roll out in the coming months — include the ability to manage chats on up to 10 devices and new customizable WhatsApp chat-to-chat links for businesses to have an online presence and attract customers, the company said in a blog post.

“Overall, we think messaging is going to be how people want to connect with businesses and vice versa. It’s the fastest and easiest way to get things done,” the spokesperson said.

Why Main Street Business is Focusing on WhatsApp Push

Analysts see the potential. “Message is a global platform that everyone uses continuously. It’s big and growing,” said Brian Fitzgerald, managing director and senior equity research analyst at Wells Fargo Securities.

In America, WhatsApp is still “an underutilized resource for small businesses,” said Rob Retzlaff, executive director of the Connected Commerce Council, a non-profit organization that promotes small businesses’ access to digital technologies and tools.

It’s something that will see the meta change over time. “We are firm believers that that behavior will continue to grow globally,” the company’s chief operating officer, Sheryl Sandberg, said on the July 27 second-quarter earnings call. The company has 1 billion users from A. Business on WhatsApp, Messenger and Instagram every week.

The importance of free and low-cost digital tools for small businesses has been highlighted in a report from the Chamber of Commerce Meeting 2021. The report says that nearly 11 million small businesses would have closed all or part of their operations if it weren’t for the digital tools that keep them running.

One of the meta drivers in promoting WhatsApp business is advertising revenue. “Click to Mail is already a multi-billion dollar business for us and we continue to see strong double-digit year-over-year growth,” Sandberg said on the second quarter earnings call. Click for Message “For us, it’s one of our fastest growing advertising formats,” she added. The company didn’t say how many of them will come with WhatsApp, Messenger or Instagram.

Businesses like this format because it’s “cheap interaction [with consumers] It feels a little more personal,” Stifel’s Kelly said. It also eases the problems caused by Apple’s privacy changes to its iOS operating system last year.

For example, say a customer sees a Facebook ad for a sneaker retailer and contacts the business directly on WhatsApp. “In a world where we’re trying to do more and more with less and less data, there’s no leakage. Everything is protected,” Fitzgerald said. “no one [else] The world knows I bought these sneakers and there is a direct relationship with the business and the consumer.

Additionally, by offering premium services, Meta can increase revenue, at least marginally, Kelly said.

Jose Montoya Gamboa, owner of Malhaya in Mexico, who has been using the free business app for years, said he plans to pay for the premium version when it becomes available because he likes the ability to use it on multiple devices.

But Geraldine Colossia, community manager for Someone Somewhere, a certified B corporation partnering with hundreds of artisans around Mexico, isn’t convinced. She has been using the free version of the app for more than two years, and although she considered paying, she said the decision would change the actual features and pricing.