Meta’s investment in WhatsApp, a bold billion acquisition made a decade ago, is beginning to yield substantial returns as the messaging app emerges as a significant contributor to the company’s revenue streams. In the latest Q3 earnings call, Meta reported an impressive 48% year-over-year increase in non-advertising revenue, largely attributed to WhatsApp’s business messaging capabilities.
WhatsApp’s business messaging product allows companies to engage with customers through paid conversations, a strategy that has been pivotal in driving revenue growth since the third quarter of 2022. However, the journey to monetization has not been without its challenges. Matt Idema, former VP of business messaging at Meta, acknowledged the complexities involved in transforming a messaging platform into a viable business model.
Despite non-advertising revenue still representing a small portion of Meta’s overall earnings—4 million in Q3 compared to a staggering .9 billion in ad revenue—the growth rate is noteworthy. This segment is expanding at more than double the pace of the advertising business, highlighting a promising opportunity for Meta. Mark Mahaney, a prominent tech analyst at Evercore ISI, has observed that monetization efforts for Meta’s messaging products, including WhatsApp, Messenger, and Instagram Direct, are still in their infancy. He estimates that messaging could account for around 10% of Meta’s total revenue, with significant growth potential ahead.
Messaging has been identified as one of Meta’s most intriguing under-monetized assets, especially given the vast user engagement in direct messages. During a recent event in Austin, Texas, Tom Alison, head of Facebook, noted a remarkable 100% year-over-year increase in content shared through DMs, a trend Meta refers to as “private sharing.” This shift in user behavior underscores the necessity for Meta to enhance its monetization strategies within its messaging platforms.
In addition to WhatsApp’s business messaging, Meta is exploring various revenue avenues through sponsored messages in Messenger and “click-to-message” ads that direct users to conversations with businesses across its platforms. Mahaney expressed optimism about Meta’s ability to ramp up monetization efforts for WhatsApp, suggesting that the company is on the right path.
Looking ahead, generative AI could play a transformative role in enhancing the efficiency of Meta’s messaging business. CEO Mark Zuckerberg has indicated that AI technology could evolve into a substantial revenue generator, potentially integrating ads and paid content into AI interactions and offering users access to advanced AI models.
Users are spending more time in DMs
The shift towards monetizing messaging could prove to be a crucial strategy for Meta, especially as user behavior trends toward sharing content in direct messages rather than traditional feeds on Facebook or Instagram. Adam Mosseri, head of Instagram, emphasized this transition, noting that sharing is increasingly moving from feed-based formats to messaging-based formats.
Beyond WhatsApp and Instagram, Meta is enhancing its Messenger app with new features such as community chats, reminiscent of Discord channels, and tools that allow users to reminisce over shared photos. However, each messaging product serves distinct user bases and presents unique monetization opportunities. Loredana Crisan, who oversees messaging products across Facebook and Instagram, remarked on the parallel development of features tailored to meet market needs, despite the lack of integration among the products themselves.
