popular messaging app has not significantly changed its business model to make money.
But now comes a substantial step towards chasing profits: WhatsApp has hired Matthew Idema, a senior executive in marketing and advertising from Facebook, to be its first chief operating officer, a spokesperson for WhatsApp told FORBES.
The hiring was first reported by Recode, which said that while Idema’s role was still being “ironed out” his new job would see him focus on helping WhatsApp monetize itself. WhatsApp announced his appointment internally on Tuesday afternoon. Like WhatsApp’s co-founders Idema spent a large chunk of his earlier career in Silicon Valley at Yahoo.
Facebook’s Mark Zuckerberg brokered his blockbuster takeover deal with WhatsApp in February 2014 on the premise that the company would remain independent, and that he wouldn’t put pressure on its founders Jan Koum and Brian Acton to monetize. This, despite the fact that Zuckerberg bought Instagram for far less ($1 billion) in 2012, and Instagram’s revenue has since shot up to $630 million in 2015, according to eMarketer.
Matthew Idema (Photo via Facebook)
For years WhatsApp had charged its users, who now number 1.2 billion, a small annual subscription to use the app, and that brought in a few million dollars each year in revenue. It also pledged to never show them ads.
Then in January 2016, Koum announced in a blog post that the subscription fees were ending, and that WhatsApp was exploring ways of charging businesses to communicate with its users in an objective, useful and basically non-ad-like way. “That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight,” he said.
Even back then this goal and the scenarios that contextualised it sounded a little unrealistic — businesses want to pay to send you persuasive messages, more than they do informative ones — and that might explain why, a year later, we have yet to see examples in the wild of businesses chatting to WhatsApp users.
In joining WhatsApp as COO, Idema may take some of what Facebook has learned from trying to do similar things on Messenger. In early 2016 Facebook invited businesses to target its users through the Facebook News Feed, and then chat to them on Messenger with so-called chat bots.
This was part of a loudly-touted belief in the tech industry at the time that chat bots were ushering in an age of “conversational commerce” that would transform the way advertisers engaged with people. Months later, Messenger’s vice president David Marcus admitted to a TechCrunch Disrupt audience that bots “got really overhyped, really, really quickly.”
EU Antitrust Commissioner Margrethe Vestager has accused Facebook of giving regulators 'incorrect or misleading' information about how it would take data from WhatsApp users. (AP Photo/Darko Vojinovic)
While Facebook’s ad revenue still soared by almost 60% to $26 billion for 2016, it’s unclear how much of that came from chat bots. It was probably not much. “Consumers have been slow to warm up to the idea of interacting with chat bots and paid advertising in messaging applications,” says Debra Aho Williamson, a principal analyst at market research firm eMarketer.
Facebook’s most substantial attempts to make money from WhatsApp till now came in August 2016, when WhatsApp announced that it would start funnelling data about its users to Facebook to help with ad targeting on Facebook.
This prompted a backlash from many WhatsApp users who saw the app as a privacy haven thanks to its default encryption standards. It also sparked an investigation by the European Competition Commission into whether Facebook misled regulators about its intentions to take data on WhatsApp users, an issue Idema will have to keep an eye on when navigating WhatsApp’s next steps here.
Idema’s views on advertising seem, at least, to fit in fairly well with WhatsApp’s. In a list of predictions he wrote for Campaign on digital marketing in 2015, he said that businesses would increasingly use messaging to interact with customers, adding that they’d also take a more personalized approach to targeting.
Personalized ads — or targeted messages, depending on how you want to describe this rather gray area — would be another tricky issue for WhatsApp to navigate, given that it was founded on strict privacy principles. But WhatsApp also needs to make good on its obligations to Facebook, and that could spell some challenging reassessments with Idema over the coming year.
Comments
Post a Comment