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WhatsApp Business in Enterprise Messaging

How WhatsApp will leverage its position on personal messaging to create their actual A2P business model

Jorge Serna
Dec 15, 2016 · 12 min read

Last month I attended in London the conference, in which several industry players discussed about their views on the situation of messaging in general but SMS in particular.

One key aspect of the sessions was a reinforcement of the message that ‘’ as exemplified by the current growing business of SMS A2P (), which is generating new revenues for Telco and aggregator companies. This is happening even while P2P (Person to Person) SMS traffic and revenues going down due to the shift to messaging apps like Facebook Messenger, Telegram, and — of course — WhatsApp.

The advantages of SMS for businesses

Key arguments around the relevance of SMS for this A2P market were two specific characteristics of the SMS service that were highlighted as fundamental for businesses when wanting to engage with end customers:

  • Reach. While smartphone penetration and data coverage keeps growing worldwide, it is true that SMS provides access to a wider market than any existing app, because it is available on every mobile phone (not just smartphones but also featurephones). To receive a message in a specific app the user needs not only to have a supported device and the app itself installed, but they also require to have balance in their data plan (not a trivial thing in some markets) and availability of a data connection (think of people switching off cellular data on roaming to avoid its current costs).
  • Trust. Here the argument is that operators can act as a trust agent, providing in some circumstances confidence that messages coming on the SMS channel are from legitimate sources and not some sort of phishing attack. In practice these circumstances are based on the usage of as SMS senders or (i.e. when the sender of the message uses letters - like your bank name - rather than a number, but that name is not coming from your address book).

A2P messaging in apps: WhatsApp

While I see some merit in those arguments, I think their relevance is relative and in some cases they are not sustainable. We need to take a look of what alternatives may be available for businesses for A2P when the app-based messaging market has reached the current scale.

Many of the arguments in this article could be applied to different apps, like Facebook Messenger or Telegram, but I will focus on WhatsApp due to several reasons:

  1. Of course, one is the weight WhatsApp has in the market, particularly in Europe and Latin america, which are the markets I am more involved with. Also, considering markets like China or Japan would be a more descriptive exercise, because there the business offerings of incumbent messaging apps are already a reality.
  2. WhatsApp has announced their as a base for their business model.
  3. WhatsApp traditional position on marketing messages will force them to do something “different” in this space.

So with this in mind I think it is important to take a look to what WhatsApp can offer to businesses and what would be the specific advantages that they would bring over A2P SMS.

WhatsApp, businesses and ads

A big part of WhatsApp’s original positioning was that , and that was the main reason offered for charging for the service. After they were acquired by Facebook some things changed, and they no longer charge for the service, and while ads are still not displayed in WhatsApp itself, they are (although this has been a ).

Taking a look at the newest version of we can get some hints on the kind of things they expect to do in the future:

We will explore ways for you and businesses to communicate with each other using WhatsApp, such as through order, transaction, and appointment information, delivery and shipping notifications, product and service updates, and marketing. For example, you may receive flight status information for upcoming travel, a receipt for something you purchased, or a notification when a delivery will be made. Messages you may receive containing marketing could include an offer for something that might interest you. We do not want you to have a spammy experience; as with all of your messages, you can manage these communications, and we will honor the choices you make.

So they have definitely moved into a different position. But it is important to consider their history when analyzing what they may design for their new business strategy. Their success to some extent has been built on them providing a relevant channel to reach other people, keeping it ad-free, and suddenly having marketing messages generating noise might negatively impact their P2P position.

The relevance of the channel

The value of a communication channel for business interaction is related with the value of the channel itself, ignoring those business interactions. In the context of what we are discussing, if users stop using SMS for their personal comms, and they increasingly see SMS as a source for mainly A2P messages, then SMS can potentially be perceived as a sort of spam folder.

So I believe that the A2P relevance can be seriously challenged by the loss of P2P relevance, even if revenue numbers for telcos today show a different trend in the short term.

As more personal interactions are moving to WhatsApp, and it becomes the default channel, there are two related effects:

  • Customers spend more time in WhatsApp, as messages coming through that channel drive them into the app and every interaction actually increases their time there. This is a virtuous cycle which makes it a more present channel, where there are more chances to be read and interacted with. It is where the customer “is”, and is more likely to be found
  • Business will want to be where the customer is, so this will drive them to want to use it also as a channel to reach these customers.

This is already happening today, and you can see how business are already communicating with their customers via WhatsApp. We have examples from operator’s themselves, like , or banks that also keep it as a channel to engage with customers, like , the online branch of Banco de Santander.

Contact options from OpenBank (source:

These services are not currently supported directly by WhatsApp, they are using some “unofficial” integrations, but they definitely are a market validation for WhatsApp that there is an opportunity for them if the formally enter this space and offer the appropriate tools. On the other hand this kind of usage is a risk for the traditional “ad-free” positioning of WhatsApp, as it can potentially increase its “spaminess” with exactly the same risks that SMS has.

Both aspects will have an impact in the experience that customers will get for “official” A2P messages in Whatsapp. I will talk about this later on.

The Reach of SMS and Apps

The advantages of reaching featurephones or people without balance are very real, but they also point to specific customer segments and markets that may not be relevant to all business. And with , it is difficult to argue that reach is a significant issue for them.

Also my personal experience with makes me very aware that sometimes cellular coverage does not reach everywhere, and that is why telcos are investing in solutions that allow . There are places in which you will not be able to receive a SMS, but if there’s Wifi then you can use WhatsApp.

Where the reach aspect of SMS is still a critical advantage is for the that rely on it. And it is somewhat ironic to consider in this context that for a consumer to set up a WhatsApp account they need to be able to receive that kind of SMS. An A2P SMS.

Trust Factor

Abuse of SMS as a marketing channel in some countries/operators has led to increase its perception of “spaminess”, and education on short codes vs long numbers is not widespread enough to really be able to ensure customers that a SMS can be trusted more than other messaging options. In fact is a real issue that works against that expectation.

In WhatsApp there are (currently) no short codes or alphanumeric senders to create this experience, but truth is they don’t need that. WhatsApp can provide a very different approach in which the actual trust perception can be increased for end users with no education required. This is not evident when looking at the current experience of business services over WhatsApp (like the ones mentioned above), because they are relaying on the current experience of WhatsApp applications, which basically mimics (enriching with more communication options) the interaction you have in a basic SMS composer.

But that is the interesting part that application-based service delivery mechanisms have: WhatsApp can update their experience at any time just by releasing a new application versions through the corresponding App Stores. Yes, the update cycle of applications creates some limitations as not everyone updates their apps immediately and some people stay in older versions for long periods, but even in that field WhatsApp has become more aggressive lately, and they are and pushing users to update their apps to the latest version as soon as possible.

With a relatively simple update of their apps, WhatsApp can provide a new experience that will provide trusted channels to business.

Adding a Business dimension to a Personal Communications User Experience

As mentioned before, one critical aspect for being an attractive channel is relevance for customer, and this relevance will decrease as the amount of spam grows there. How can WhatsApp both serve business and avoid becoming spammy?

I believe it will be by being extremely open about the nature of messages, separating clearly for the users which ones are promotional in nature. Think of how Gmail organizes automatically email, but applied to your messaging inbox:

Gmail mobile UI (source Google)

A great difference with this approach is that rather that an algorithm “guessing” what kind of messages you get for that classification, WhatsApp would know it with certainty, because access to those “business channels” would be restricted to actual businesses with a (paying) relationship with WhatsApp.

Of course I am not saying that that will be the specific experience they will provide, there are lots of alternatives (for instance with a full separate tab grouping different categories of A2P), but my prediction is that they will put a lot of effort in clearly separating the personal and A2P messages in the UI, so that they will keep the “clean” experience in personal conversations, while enabling a rich communication channel for the businesses.

This will bring a lot of differential advantages for businesses to interact with users via WhatsApp:

  • On the trust aspect, the identity for the conversations in these business channels would be managed by WhatsApp (or the business itself, via WhatsApp) which means that not only it would always present a clearer trustable identity than short codes, but it will be able to go beyond a simple name including additional branding elements, like a visual avatar and probably further customizations on the conversation screen itself. This will be a further proof of “trustability” for end users, and a great value to provide to businesses themselves. And also a great business if we consider that customization for a company can be a
  • WhatsApp capabilities can also be leveraged as part of the business offering, of course. This allows conversational interactions between business and their customers - something that is not even possible for SMS with alphanumeric senders and that has issue for short codes too as customers are used to these SMS not only not being free but actually being premium SMS with a higher cost - but also with the richness already available in WhatsApp to share high resolution images (which can be very useful in customer support), locations (that can be good for coupons), sound clips (also interesting for customer support: think on explaining the weird noise your heater is doing just by sending the noise itself), etc. Moreover, WhatsApp may offer specific capabilities to business to allow for instance simple menu options selections with just taps instead of having to rely on full texting.
  • Beyond this basic approaches there is also the model being sucessfuly exploited by and . Business channels offered by these apps go well beyond the expectation of a chat window, becoming mini-portals that allow rich interactions that even include payment capabilities.

But there is one aspect in which the experience will be mostly the same for A2P and P2P: notifications.

Notifications for Business?

One of the key aspects of the messaging boom in apps has been push notification support in smartphone OS, that facilitated the asynchronous nature of messaging interaction. Users open the app when they want to send a message, yes, but more importantly, are notified of inbound messages that are what drives them to open the app and interact. This is what enables the virtuouos cycle for them.

But the notification mechanism itself has some limitations, specially in the iOS platform, that have forced some. WhatsApp in particular has opted to use emojis as a way to highlight specific kind of messages. For instance this is how they notified of an incoming call when they launched WhatsApp calling, before a :

WhatsApp iOS notification for an inbound call pre-IOS 10

And this is how they inform users that a photo message has been received:

WhatsApp iOS notification for photos

have followed the model available in Android for a while that enables users to interact directly with a notification without having to fully open the application, so we can expect that WhatsApp will bring these to iOS too.

Interaction with WhatsApp notification in Android

But none of these mechanisms explicitly differentiate a P2P message from an A2P one. And probably that is not going to change significantly, because one of the advantages for A2P is that messages can be ‘pushed’ into users in the same way that their natural conversations do. But again we face the risk of “spamminess”, and the claim in their T&Cs:

We do not want you to have a spammy experience; as with all of your messages, you can manage these communications, and we will honor the choices you make.

So what does this mean? My guess is:

  • They will again clearly mark notifications for A2P messages. With the current mechanisms in Android and iOS this will likely involve some (set of) emoji(s) that indicate the message is (some specific kind of) A2P message. I don’t have a defined opinion of what these will be but I can definitely see promotions/coupon messages marked with this: 🎁, but more likely I can see also options to business in which different emojis offer different price levels. This has its , and is clearly one of the advantages that come with owning the UX in the device.
  • They will extend the notification settings to allow customers to have these “choices” the will “honor”. Already WhatsApp offers a lot of customization to (power) users:
WhatsApp notification settings

So extending this with sections to opt-out of certain marketing messages, or control how many the user is willing to receive per week, or even select categories of communications they are interested in does not seem complicated. For most customers the normal experience will be to receive all this messages and WhatsApp will control individual exposure to avoid that users are overwelmed by spam, but they will also have a choice to further control it, it’s just that not all users will know how to do this.

So what about SMS A2P?

So overall WhatsApp has two very strong tools to become a significant player on A2P messaging:

  • Their relevance in the P2P market
  • Their ability to change their experience to include business messages in a way that does not impact significantly the current P2P experience

This is something that will for sure impact the A2P SMS business, but also shows that strategies to leverage those same strengths in SMS can be explored. SMS has huge reach that can be recaptured for relevance, and moving to an can also become a tool to shift experience to make it valuable again.

Jorge Serna

Written by

Product & Strategy in @securitize — formerly Director of Global Communication Products @Telefonica

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