How Does WhatsApp Make Money

Update on

The messages we send on WhatsApp are end-to-end encrypted so saying they monitor you there and helps them to target you better for ads. In this article, we will go into depth to know about the mode of revenue generation of WhatsApp.

When they say the text is encrypted, it is not entirely encrypted. What this means is that the encryption model WhatsApp uses throws out some keywords like if you’re talking about smartphones, the algorithm might throw some keywords of the companies or the phone you’re talking about in your chat, but not the entire chat between two end-users.

While on Facebook, it does provide users an option to opt-in for Ads. It’s up to users to read terms before enabling the ads feature. The company whose ad you can see is the one that pays Facebook for the ads. Furthermore, ads are not the only means for social messaging services to earn money.

Its major source of income is by selling its database. WhatsApp is a service that was built when it had no competition. Now a dozen companies are trying to steal the space that WhatsApp rightly owns.


How Does WhatsApp Generate Revenue Even Though It Is Free And Ad-free?

WhatsApp is not selling people’s data but the people themselves. They cannot read our messages but what they do is mining for keywords in their data warehouse and sell the people to other companies.

mining keywords in data

For example, NIKE might pay Facebook for targeted advertisements, so Facebook would mine for a keyword such as ‘shoes’ and all the people who have written this word in their message to anyone, for those people NIKE ads would appear on Instagram and Facebook.

In this case, Target marketing plays a vital role in luring customers. Target Marketing also works to our advantage. Suppose you are a Photographer, and they show you ads for Photo Gear, they’re doing a favor for you.

Facebook is not doing anything unique in the ad space. They just have the scale to make the most noise in the media. Data gathering, hyper-targeting, and custom ads are commonplace in digital advertising.

If we’re just worried about FB, we don’t know half of the data gathering elsewhere. A messaging app like WhatsApp is free and it doesn’t show ads, WhatsApp is Facebook’s subsidiary.

facebook data

Digital companies make money out of user data and sell them to advertisers. It’s not a coincidence that when you discuss with your friend about buying a TV on WhatsApp and magically Facebook shows TV ads on your news feed. WhatsApp is used by the company as a source of metadata for their intelligence systems. While calls are end-to-end encrypted, call patterns can be tracked and used for context and to extrapolate interests.

Let’s not forget about the value of the brand. Internet companies are looking to add mobile brands to their stable. In 100 years, these companies may still be around.

It is the critical mass these early companies enjoy, the average person wants to use one service that will be able to connect to the majority of people, and as a creature of habit, they will stick to one service. WhatsApp is worth what a Facebook or Google is willing to get shareholder support to purchase it.


WhatsApp business model


How Does Whatsapp Messaging Service Provide End-to-end Encryption And What Does It Mean?

WhatsApp uses end-to-end encryption. Unlike Facebook or other things where they store the data and run the algorithm. WhatsApp uses security measures called secret which needs sender and receiver keys to unlock the data. Yes if they want they can do it, but this comes more under direct data tampering, unlike other user-friendly content.

WhatsApp Has a “WhatsApp Business App” That only for the ones who runs their business. “WhatsApp Business App” gives some more trust and worth for both Business or customers. Behind this, all “WhatsApp” has The Data, we mean Personal Data that helps to get a better product.

end-to-end encryption

For the people who didn’t pay attention and couldn’t link the two together, you provide Facebook with information using WhatsApp. They use that information for tailoring ads to you, when those ads suit your needs you will visit the ad or purchase the product/service.

The advertiser will continuously post on Facebook giving them money. Before WhatsApp was bought by Facebook they made money by the $0.99 per year scheme to use their messaging service.


Inception of WhatsApp

WhatsApp messaging app was developed by Jan Koum and Brain Action. Both of them used to work in Yahoo and later on in the year 2009 they developed a messaging which is referred to as “WhatsApp”.

Facebook bought the stocks of WhatsApp for 12billion. They paid 4 billion to the developers. And the remaining 3 billion is in the form of Facebook shares that are being given to the developers of WhatsApp.

Inception of WhatsApp

WhatsApp used to make money through the purchase of the app. It was not free for iPhone and also, they charge after the 1-year subscription on other devices like android, blackberry, etc. Another major source of income is from sponsors. WhatsApp has received major funding from companies in different countries.

They attract major companies for sponsors because the app reaches out to around 430 million users. Nowadays, third-party WhatsApp mods are also available like GBWhatsApp.


Working Methodology And Future Prospects Of Whatsapp For The Direct Generation Of Revenue

WhatsApp is only Facebook’s arm to push itself into the remaining billions of people who don’t use Facebook. So let us say the world has more than 5 billion phone users and let us say 2.5 billion devices are capable of installing WhatsApp which can read contacts on those phones and send to the Facebook server over the internet.

WhatsApp users

Then Facebook maps them and starts friend suggestions and invitations. To test it just install WhatsApp and have a bunch of new contacts saved who also use WhatsApp and Facebook. Let say Some big company like Google or even Facebook buys true caller they will just drop annoying ads and launch free service and push their main product.

WhatsApp has some aspiring goals and motives for the future. For the time being, WhatsApp is completely free to download, install, use and it doesn’t have any direct source of revenue generation. As the number of users of WhatsApp is growing at a tremendous speed, the messaging app is on the brink of creating monopolistic maneuvers.

Although it is free now the future can be different and you may need to pay a rental amount to use it.


Final Words

Overall we can say that these companies like WhatsApp and Facebook, are “data distilleries” – who love more and more raw data coming from every activity of their consumers, like – running, walking, exercising, TV watching, just sitting in traffic,-the devices consumers use (like watches, mobiles, TVs, exercise bands…) generate raw data.

These companies can then predict when a consumer is ready to buy. This is a complex process and it requires algorithms and AI to offer rightful ads to the consumer to make money.

Pin It on Pinterest