WhatsApp Business Model ( Case-Study )

Whenever a new company is launched in the world of business, the main motive of its formation in most cases is - "To make money by giving people Services or Products."

Making money from business is not an easy task. Therefore, to make money almost every company has its own special well designed plan which is called BUSINESS MODEL in business language.

Every company works according to its business model after its launch and increases its revenue by helping people with its services or products.

For Example: - Facebook has a business model, connecting people to each other and then showing them the way they like, taking money from a company that offers ads.

The business model of most popular online platforms such as Google, Twitter, LinkedIn, Quora, Instagram, YouTube, Snapchat is also similar to BizModel with Facebook advertising.

But do you know what is the business model of the world's most popular messaging platform WhatsApp? Which means WhatsApp earns money by using it?

If you run WhatsApp, I have a question for you ...

• Have you ever seen any kind of advertisement on WhatsApp in your life?

off course, Not!

• Have you ever paid for running WhatsApp, that is, ever bought a subscription to WhatsApp?

If you have been running WhatsApp for the last 5 years, this cannot be done at all (since WhatsApp is absolutely free for every person in the world since Feb 2016.)

So now the question arises that if WhatsApp neither takes money from its users nor shows them ads, then it makes money? After all, is it a business model?

The answer is- "Until a few years ago, WhatsApp used to earn money from Paid Subscription and today probably earns through its giant DATABASE! Apart from this, It has many great BizModel for the future.

WhatsApp has changed its business models again and again with the passage of time and it is expected that it will definitely do so more times in the coming times.

The easier it is to run WhatsApp, the more complex it is to understand the business models. Therefore, in this article, we have divided the business plans which change from time to time of WhatsApp mainly into 3 parts - Past, Present and Future, so that you can understand them clearly.

What is the Business Model of WhatsApp?

Brian Acton and Jan Kaum, who once worked in the Internet world, Yahoo (YAHOO!), Made WhatsApp the most in November 2009 after nearly a year and a half of hard work and long beta testing. First launched in Apple's App Store.

From the very beginning, one of the founders of WhatsApp has been praise-worthy, that they always put their users above money and provided people with a very good Interaction Platform without any hindrance.

Facebook founder Mark Zuckerberg said in one of his interviews that one of the biggest reasons behind buying WhatsApp for a huge amount like 11 trillion rupees - its very good User Engagement means it was the best App after Facebook on which People used to like to spend hours every day.

However, if we talk about business model, WhatApp has not been able to create a Permanant BizModel for itself till a decade after its launch. It has adopted many Revenue Generating Strategies in his lifetime and is looking to adopt many in the future.

• What are the business models of WhatsApp, Let's know -

1) • WhatsApp Former Business ( from 2009 to February 2016):

In February 2014, Facebook bought WhatsApp for $ 19 billion (about 11 trillion rupees), launched in November 2009, after seeing the growing popularity of WhatsApp and user database.

In this time period from 2009 to 2016, WhatsApp earned significantly less money than its expenses, but the amount of work it did was mainly earned in these 3 ways -

A] • Revenue by App Downloading -

You may be surprised to know that whenever we download an app from App Store, Play Store, 9Apps or Up to Down, the owner of that app gets about $ 1 (Rs 65-70) per download and now because WhatsApp (WA) is also an app, so it also gets an average of $ 1 per download (which can vary from country to country).

As of February 2016 (Facebook Acquisition), WhatsApp had around 400 million users, or 400 million users worldwide, meaning it had been downloaded 400 million times, meaning WA in its initial 6 years (from 2009 to 2014) downloaded about 40 Earned millions of dollars, which was a small way of earning WA. This is the Evergreen Business Model of WhatsApp, from which this app generates very little revenue yet today.

B] • Fees from users (Revenue by Subscription) -

If you have been running WhatsApp for the last 5-6 years, then you must be aware that before Feb 2016 WhatsApp was not a PAID App but a FREE one.

It was completely free for users of all operating systems (eg, Android, Blackberry) except ios but after a year they were charged about $ 0.99 (then around Rs 55) annually.

I-phone (i Phone) users had to pay $ 0.99 while installing WhatsApp from the App Store, there was no plan for FREE; Because most of them are rich people who could pay such fees easily.

It is believed that by taking fees from its users in this way, WhatsApp has earned revenue of about $ 1 Billion or more than 60 billion rupees in lifetime.

In the initial days this method was very useful for WA, but now because after February 2016 this app is completely free for every person in the world, so this business model of WhatsApp is no longer in existence.

C] • Through Venture Capital -

Although WhatsApp did not earn money in this way, it made its service and business even better with loan money.

Sequoia Caps, a US-based investing company, invested money twice (in 2011 and 2013) after seeing the popularity of WhatsApp, which received almost 50 times more money in Return!

Today, WhatsApp runs under Facebook Inc, so it has no cash crunch, but at the time it started, it had a huge shortage of money, which its founders and investors completed together.

This was the old business model of WhatsApp, which was changed by Facebook Inc to make WhatsApp a Free Service in 2016.

But can you explain the reason that when WhatsApp was earning 20 billion rupees in a year, then what was the need of Facebook to buy it by spending 11 trillion rupees. Why did Facebook need to make up its own deficit?

You win some, you lose some.

This is what Facebook has done and is still doing, but how?

By making WhatsApp free, the Facebook company is working on a big plan in the future, but before seeing the future, let us know how WhatsApp earns money in the present time -

2) • WhatsApp Current Business Models: 2016-21

WhatsApp currently makes money in 3 ways-

A] • From app download - we have talked about this in the previous point.

B] • From WhatsApp Business App (By WhatsApp Biz App) -

Whatsapp launched a special app for small traders in February 2018, which they named WA Business.

With this app, small businesses can directly connect with their customers through Whatsapp and can increase their business.

Although this app is completely free right now, Whatsapp company is not making money from it yet, but there is every hope that this app will prove to be good for the company in the coming time.

C] • Using data in other services (By Using Data) -

There is a difference of opinion on what reason the Facebook company bought WhatsApp for huge amounts like 19 Billion Dollar (which is more than NASA's annual budget).

It is believed that the biggest reason behind buying Facebook inc's WhatsApp was - "Its spread across the world, the User Network and the Giant Database."

By the way, WhatsApp Messages are complete, that is, no one can read except those who send and recieve them. But still it is said that WhatsApp shares the messages, location, photos, links, audio-video calls, status-story etc you sent with Facebook.

It is believed that the process of processing this data in Facebook is done by very advanced machines. Based on your data (messages, location ..), these machines give you an idea of ​​the things you need and like and give information to Facebook.

Now Facebook starts showing ads according to your needs and likes on the Facebook ID created by your Whatsapp Number, which makes it to make even more money.

NB: This is just a guess. Facebook has never confirmed that it makes money using WhatsApp data on Facebook.

Apart from this, Facebook company does not show annual revenue of WhatsApp separately, but Facebook, WhatsApp and Instagram shows the full yearly earnings of the three.

You saw that whenever we create a Facebook account with our WhatsApp Number, then all our WhatsApp contacts come in it. And possibly Facebook also does this based on your WhatsApp data.

By now we know that in what ways WhatsApp used to earn and earn money in the past times and the present times?

However, WhatsApp has not been able to do as much business as it deserves to do in these ways.

WhatsApp has many great business models to earn big money in the future, some of which are the most important BizModel like this -

3) • Future Business Models of WhatsApp (Futuristic WhatsApp Biz Models):

A] • Connecting Customers directly to Comapny (Business Platform) -

There are many companies that do not understand the needs of their customers properly, that is, they cannot estimate what their customers want from them. And one of the biggest reasons for this misunderstanding is - "Lack of interaction between company and customers" (Lake of Communication).

Keeping this in mind, WhatsApp is preparing to introduce a new feature, so that through WhatsApp, verified companies (4) will be able to chat directly with their customers and it will be easier for them to do business.

For this, those companies will have to pay a lot of money to WhatsApp so that WhatsApp will be able to generate good revenue.

Last year, WhatsApp has also tested this feature, which was attended by big Airline companies like KLM and AirMexico. Hopefully, this feature will be coming soon in WhatsApp.

B] • Promoting WhatsApp as Payment App (P2P Payment) -

The era has changed - Today people roam with money, not in purses, in mobile.

Keeping this in mind, WhatsApp is about to launch a feature in developing countries like India, so that people will be able to use WhatsApp as a Payment App by linking their WhatsApp account to Bank Account, as we are now Paytm, PhonePe and Google Pay are used.

WhatsApp has also done beta testing of this new feature and is now preparing to launch it. After this feature is added to WhatsApp, WhatsApp Revenue is likely to get a big jump because WhatsApp already has a huge userbase and at the same time WhatsApp is a reliable app.

So when people will pay from WhatsApp (eg Ticket Book, Bill Pay), WhatsApp will charge a few rupees from them Charge / Commision and this will increase WhatsApp income.

NOTE: WhatsApp is thinking of launching the Payment Feature only in developing countries because there is not much competition in mobile wallet in these countries or in some countries this trend has started in recent years.

On the other hand, if we talk about developed countries like America, Canada, then Giant P2P brand like PayPal has been established for the last two decades, making it easy for WhatsApp to compete. That is why WhatsApp is preparing to launch Peer To Peer Payment feature only in developing countries.

C] • Connecting WhatsApp to Facebook and Instagram (Integrating WA, FB & IG) -

Facebook is working hard on integrating its three services (FB, WA & IG) in the same way as Google has already done this.

Recently there was news that Facebook Inc is working on connecting all the three platforms together so that people can message their friends on Facebook and Instagram from WhatsApp, and contacts from Facebook, Instagram to WhatsApp.

Apart from this, Facebook is also planning to connect its Marketplace feature to WhatsApp so that it can grow its business without showing ads to WhatsApp users.

Overall, Facebook company is trying to increase its revenue by using ad's data to show ads on its other platforms.

So friends, these were the three main futurestic BizModels of WhatsApp. Apart from these, there are some other small plans that facebook inc may consider in the future-

• How does Whatsup make money in the present day?

Although this thing is not completely proved, but most experts still believe that WhatsApp currently gives our data to facebook, instagram so that it can show us appropriate ads so that its business can grow. As of today, this is the main earning source of whatsapp.

• What is Encryption in WhatsApp?

Encryption means that the message you sent cannot be read by anyone other than you and the reciever. That is, the messages you send in WhatsApp, they can neither read your Sim Company (ISP) nor can the WhatsApp company itself read your messages.

• What can be the future of WhatsApp?

Looking at the better services of WhatsApp and the large user base, today we can say that its future is going to be very bright and it is on the path of becoming the largest Subsidiary of facebook inc!

So friends, this was today's article. I hope you like it.