Facebook is one of the most popular social networking websites with over a billion users worldwide. But Facebook is still not very popular in Brazil, Eastern Europe, Russia and some parts of the Middle East with a complete ban in China.
WhatsApp, on the other hand, is one of the most popular messaging apps has a solid user base across the world even where Facebook has not been able to penetrate. Seeing this and to improve its messenger service Facebook bought WhatsApp in whopping 19 billion dollars. This alliance has the following benefits for Facebook:
Increase in user base
Facebook’s Messenger was lagging behind WhatsApp and Snap Chat in terms of engagement among the teens. With this strategic purchase, its speculated that Facebook would be able to increase its reach and expand into the countries it is currently not very popular.
The officials at Facebook want to integrate Facebook with WhatsApp making both one and interdependent. This would make the mobile device users use Facebook one way or other thus increasing their user base. It has been actually a very smart and strategic move for Facebook to enter further into those countries, where it is not used much. This buyout route will help them to introduce Facebook as a platform for connecting people along with WhatsApp, which has a strong presence in different geographies.
Increase in Ad Revenues
Facebook earns money through ads. It tracks the users’ likes and dislikes. Depending on this information, it displays advertisements that might be relevant to them. Facebook uses the user’s location data and skillfully targets ads based on signals that the users send where they are located at a given point in time. Based on the location the advertisements are pushed which are of interest to the users.
WhatsApp now being part of the Facebook family will now share the user information which was not previously shared with Facebook by its user when being offline from Facebook. It will further validate the location of the user through WhatsApp location tracking as well.
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Revenue earning through B2C Business model
WhatsApp has plans to implement B2C business models like connecting businesses with their users to replace SMS communications. Businesses will communicate with the consumer about the order is placed, transaction, delivery and shipping notifications, product and services updates and marketing. For example, if the user gets an appointment confirmation date via WhatsApp, then around the same time he can see Uber ads in his feed as well. This is how Facebook can use WhatsApp to earn ad revenues.
Expansion in Photo world
WhatsApp users send more than 500 million photos in a day which is more than the total amount of photos shared on Instagram and Facebook. This will help Facebook to expand its dominance over the photo world.
So making money using WhatsApp will not be an issue for Facebook at all. They are just waiting for the best time to start making money out of their investment in this messaging app. The real challenge for WhatsApp and Facebook technical people will be, to provide advertising inside WhatsApp, without annoying the user.