WhatsApp Won’t Support Ads After All
At the WOM Protocol we are creating an Ad-free experience for user-generated marketing channels and apps. Watching the saga of WhatsApp’s inability to monetize has been peculiar.
Facebook is already exceedingly profitable but has missed out developing WhatsApp into a super app, in spite of having over 1.5 Billion users.
WhatsApp was the most downloaded app of 2019, just ahead of TikTok. While Facebook’s WhatsApp won’t plaster Ads everywhere anymore, it will including Ads in WhatsApp’s Status feature.
The Future of Mobile Advertising in Focus
Facebook is “backing away” from earlier plans to sell ads for placement inside its enormously popular WhatsApp messaging service, as first reported by the WSJ. This is a bit ironic since its founders left when they couldn’t agree with the direction Facebook was taking the product.
Facebook has been very enthusiastic in its desire to monetize WhatsApp, which it acquired for $22 billion in 2014.
Now in early 2020, According to The Wall Street Journal, it apperas the team that had been working on building ads into WhatsApp was disbanded in recent months, with their work subsequently “deleted from WhatsApp’s code.” Facebook now wants to centralize its app messaging in an encrypted chat channel, where Ads might be difficult to implement.
Just how Facebook’s pivot to privacy will work is still a bit unclear. Mark Zuckerberg seems to be in favor of a unified, encrypted messaging system across Facebook, WhatsApp, and Instagram. However, with antitrust probes, the timing couldn’t be worse.
Facebook is Unable to Monetize Its Most Popular App: WhatsApp
Facebook’s plans to bring ads to WhatsApp aren’t completely dead though, they’re just on pause. Facebook is basically a glorified ad-firm whose stock is performing well in the beginning of 2020. Facebook is part of a cohort of Big Tech firms that is becoming even more powerful in the 2020s. Many are outspoken about the kind of power and influence it has with its monopoly of apps such as Instagram, WhatsApp and the Facebook flagship app.
Political ads aren’t even being regulated for dishonesty or lies, making Facebook’s ad-structure toxic to American democracy, even as Twitter, Spotify, and others have now banned political ads.
Western tech is such a monopoly if you add Facebook into the “Big Five” group, the five most valuable U.S. tech companies are now worth a staggering $5.2 trillion, accounting for over 17% of the S&P 500, according to FactSet. With Amazon aggressively getting more into Ads, these Cloud-Advertising companies are destroying the competition and the innovation of apps, where Facebook often has used anti-competitive practices in how its gone after its rivals.
Mark Zuckerberg is now very afraid of TikTok’s increasing reach. In 2019, TikTok was downloaded more than Instagram, Facebook Messenger and Facebook. ByteDance the company behind TikTok, made headway in mobile ads too in 2019 that threatened Baidu and Alibaba in mainland China.
WhatsApp isn’t WeChat, it is not a super-app, but it is a tremendous acquisition for Facebook that has become the dominant chat app of the world.
But 44% of TikTok’s downloads came in 2019 and that app has much more momentum. ByteDance has the ability to create its own apps and beat out Facebook in the acquisition of the key musical.ly app, a rare failure of Facebook’s ability to suppress or buyout potential competitors.
Facebook is Being Accused of Anticompetitive Practices in the App Economy
Facebook’s mobile advertising monopoly hasn’t just occurred naturally in a fair market capitalism scenario. Facebook is facing a recent class-action suit in Federal court for its anti-competitive practices. How many apps do not exist today, because of Facebook’s advertising monopoly and semi-illegal activities? What would Snapchat have become if it weren’t for Facebook’s cloning of its features?
Advertising has not been healthy for the Western internet’s evolution, as the media and publishers have pivoted to a subscription format (a bit too late in some cases).
Facebook’s wish to sell Ads on WhatsApp is controversial and would hurt the product like it has all of its products. Facebook’s blockchain monetization scheme called Libra and Calibra respectively is also facing a regulatory backlash. Unfortunately for Facebook, it doesn’t know how to do anything but Ads.
Is advertising the future of WhatsApp? Simply another app to be stripped down and polluted with Facebook’s monetization gimmick? Time will tell, but there seems to be considerable opposition to Ads on this product because it would destroy the user experience.
It’s 2020, it’s time to move beyond Ads. We need channels that incentivize honesty and organic reach without a paid model. This is yet another reason why at the WOM Protocol we are carefully crafting an experience that incentivizes and rewards honest word-of-mouth recommendations as part of the token economy.
Would you use WhatsApp less if it had Ads as part of the experience?
