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The evolution of private messaging has now extended to workplace communication, and the next step is connecting businesses with their customers. This has sparked renewed interest from Meta, which is expected to drive up investor demand.
Intercom, a San Francisco-based company founded in 2011, serves as an example of the sector’s prolonged incubation. Their services assist companies in engaging with customers in real-time on their own apps or websites. In 2018, Intercom reached unicorn status with a private valuation exceeding $1 billion. However, in recent times, its valuation has stagnated, leading to staff reductions. Eoghan McCabe’s return as the CEO has been accompanied by less-than-smooth public communications.
This situation mirrors the excitement surrounding Meta’s (formerly Facebook) acquisition of WhatsApp in 2014 for $19 billion – the largest acquisition the company has ever made. Meta made the service free and discarded subscriptions. Since then, WhatsApp has grown to have over 2 billion daily users worldwide. However, the revenue generated from the app has not been separately reported.
The simplicity of WhatsApp’s layout presents challenges in terms of advertising, although companies like Japan’s Line have successfully utilized promotional messages. Video ads can also be displayed in the “status” feature. Plans to facilitate payments between customers and merchants have been slow to gain traction but still hold promise as a potential revenue source.
In the past year, Meta’s CEO, Mark Zuckerberg, has shifted his focus towards business messaging for which users pay. He considers this to be the potential next major aspect of Meta’s $775 million business. WhatsApp currently generates revenue through linked advertisements on other Meta apps. Currently, 200 million businesses use WhatsApp for Business monthly, accounting for about 5% of Meta’s total. This figure has quadrupled in the span of two years.
No specific figures are provided for the number of users who actually pay to chat with customers. Convincing users to pay for something that is freely available elsewhere presents challenges, but additional services are key to increasing demand. Integrating generative artificial intelligence into WhatsApp could automate customer responses, and Intercom is also exploring the use of AI.
If Meta continues its efforts to monetize WhatsApp, it has the potential to boost valuations across the wider sector.
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