How does WhatsApp make money?

Brian Acton found WhatsApp in 2009 and Jan Koum as an alternative to pricey SMS services. The app allows users to message anyone who has the app installed by just adding their contact in the phone to upload their contact book, at no cost. It is available for all mobile systems like iOS, Androids, and desktops.

In February 2020, WhatsApp was Facebook’s second-biggest property and it had 2 billion users, after its namesake application. It is then exceeded with the third and fourth-biggest properties, Facebook’s Messenger, and Instagram. So, the question arises is how does WhatsApp make money?

Many people have a curiosity to know how WhatsApp makes money, even when WhatsApp doesn’t charge even a single dollar from its users. WhatsApp is purchased by Facebook Inc. (FB) in February 2014 for $19 billion and according to the 2014 Facebook Form 10-Q, in the nine months preceding September 30, 2014, $1,289,000 of revenue is generated by WhatsApp. We should understand how the advertising industry works and pays for advertisements, before coming on WhatsApp’s probable model of making money. On Monday, April 30, Facebook Inc. director Jan Koum and co-founder of WhatsApp announced his departure from Facebook. Companies pay the celebrity for advertising their products, a major portion of the money is for increasing the viewership due to their popularity (viewership is directly related to the sale of companies’ products) and a small portion of the money is for giving their precious time to the company for shooting the advertisement.

YouTube also gives a great opportunity to general people for making a good amount of money through their videos, by uploading them on YouTube. If someone allows the advertisements from companies to be featured on the videos uploaded by them, indexed on google, the video uploader according to views for their videos gets money from the companies(rates are around $2-10 per thousand views), because automatically their video also increases the viewership of the advertisements, linked with uploaded videos.

Sharing photos

Now come on WhatsApp, it increases the viewership of advertisements, but how. Let’s say when someone is going through YouTube videos and he found an interesting video there, linked with advertisements (the advertisement comes before starting the actual video), and shared with friends on WhatsApp. There are a few changes that they (with whom video is shared) will watch that video at least for a minute or less, depending on whether they like it or not, because people get posts on WhatsApp as a personal message. WhatsApp has more than 1.5 billion users along with more than 1 billion active users daily, who share ~200 million videos and ~65 billion WhatsApp messages per day. It means that when someone shares a video on WhatsApp, it will be circulated among a WhatsApp user across the world in large numbers, which directly increases the viewership of the advertisements, linked with that videos or pictures.

WhatsApp is also doing the same work of increasing the viewership of advertisements by its way without sharing/selling user’s data (WhatsApp’s main USP) or without showing advertisements (WhatsApp’s main USP) to its users on the app as same as a celebrity or you-tubers get money mainly for increasing the viewership of advertisements and, so WhatsApp should also get a huge amount of money from advertising companies for increasing viewership of their products.

The app becomes indispensable and the user base grows by increasing market penetration.