WhatsApp to feature ads: Can it balance between monetisation and intrusion?

WhatsApp has allegedly confirmed that it will be inserting ads into its Status feature. Multiple media reports including USA TODAY and The Economic Times, said that ads in the Status feature will be the main mode of monetisation for WhatsApp, and a chance for advertisers to engage consumers on the platform.

The ads will reportedly be driven by Facebook’s native advertising system and intended to help users understand and engage with businesses using WhatsApp, media reports stated. Earlier this year, Facebook VP of messaging products David Marcus told CNBC that there were plans to open WhatsApp up to more advertisers. This includes the integration of a new application programming interface to send and receive messages with users. Meanwhile, this move follows WhatsApp’s co-founder Jan Koum departure from the company four years after Facebook acquired rights over the app in a US$19 billion deal.

In a statement to A+M, FALCON’s co-founder Max-F. Scheichenost described the move to be “a short term asset but a long term liability”. He added that the moment a company moves from a “freemium” and/or transaction-based model to one that monetises on reach, it is forced to push more ads to users and might annoy them over time. He added it will be a very delicate and difficult balance of privacy versus usability and personalisation.

“As a listed company, you have to show growth in your ad business. So you will start to push more ads to users who in return, will be less likely to use your service in the long run,” Scheichenost said. He added:

We call it the downward cycle of advertising.

While WhatsApp’s Status feature might not be as popular as Instagram Stories or Facebook Stories among consumers, Facebook might still be able to convince advertisers to jump on board since it focuses on growth in terms of daily or monthly active users.

To make the Status feature more engaging, WhatsApp could consider creating an app-within-an-app solution just like WeChat and LINE. Scheichenost said these apps have focused on building a mobile lifestyle, with WeChat, for example, ensuring its app is consistently relevant and central to the daily lives of users. This is unlike WhatsApp, which considers user growth to be more important than whether its app is “central” to the user at the moment.

Creative Unicorn’s head of digital marketing, Karu Khoo, called the latest move by WhatsApp a “bad one”, as the platform has always been perceived by consumers as personal communications chat app, with users being comfortable that their chat information is kept private.

“This move makes users feel betrayed as now their privacy is being intrude upon and their most inner secrets are now shared to brands and advertisers to be targeted,” he said. As such, this might cause consumers to seek out other chat apps such as Telegram. Nonetheless, Khoo noted that ads are intrusive, no matter where they are being placed, and it is no doubt that brands will benefit from this move.

A move that was only a matter of time

Sitting on the other end of the spectrum was Preetham Venkky, director of KRDS Singapore, said it was obvious that WhatsApp would have leveraged on its Status feature to monetise the platform. This is because of the user experience congruence, since users are already used to similar experiences on other platforms such as Instagram.

“While Facebook hasn’t ever revealed feature specific daily active users and monthly active users, in our own research, we’ve noticed that the content garners considerable viewership. In the future, Facebook could consider adding a strong ‘share’ action. This would ensure easy sharing and wouldn’t predicate the need for users to always create original content,” he said.

Meanwhile, Rajesh Mahtani, head of business at Publicis Media, said the move made “total sense” given Facebook’s family wide audience is 2.6 billion, and growth is driven by Instagram, Messenger and WhatsApp – which are platforms offsetting flat growth of Facebook monthly average users.

“This is in line with Zuckerberg’s vision outlined during the Q3 results, when he said that video and stories will drive growth over newsfeed. Shareholders want to continue to see high growth levels, and the stock has been punished over the last three months when Facebook announced slowing revenue growth during their Q2 financial results,” he added.

The possibility of using WhatsApp to do precise message targeting at the right moment and context is appealing, said Ramakrishnan CN, partner at Entropia. While as a user, he is glad that ads are not being pushed into chats, Ramakrishnan said the new feature does not excite him yet from an advertiser’s standpoint as it is still debatable.

Finding the balance

WhatsApp is widely considered as a private communications platform among consumers, which might result in users viewing ads on the Status feature as intrusive. Industry professionals, however, remain divided on this issue.

KRDS’ Venkky said the WhatsApp Status itself is a “feed feature” and as such, users will not see it as an intrusion to their private conversations. Also, he views WhatsApp as the “perfect example” of a truly connected platform and that the strength of its network acts as a moat. As such, Venkky “sincerely doubts” such intrusions will cause users to move away from the platform.

Like Venkky, Orion Digital’s founder and CEO Shanker Joyrama also doubts that users will be quick to move away from WhatsApp. “We may want a great platform but every platform requires millions in development and server costs, so a slight inconvenience of ads which are unobtrusive should be fairly accepted,” he said. While there might be an uproar among consumers, they will ride this storm through if WhatsApp is able to ensure customer privacy.

While having ads in the WhatsApp Status feature is beneficial for brands,  Facebook will definitely needs to “tone down the level of targeting that’s possible”. Publicis Media’s Mahtani said:

Facebook and marketers have to be careful with contextual targeting where the platform crawls for key words written in the mail or message. That freaks people out.


Read also:
Will Facebook Messenger ads intrude a user’s “private” space?
Facebook breach hits 50m users, WhatsApp remains unaffected
The risk Xiaomi runs as it admits to incorporating ads in mobile software

(Photo courtesy: 123RF)

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