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Why Meta and Mark Zuckerberg are betting big on Whatsapp for business

WhatsApp Business has two components. There’s the WhatsApp Business app for small businesses. There’s also the WhatsApp Business platform, an API, for larger businesses like banks, airlines or e-commerce companies. The first 1,000 conversations on the platform each month are free. After that, businesses are charged per conversation, which includes all messages delivered in a 24-hour session, based on regional rates.

With the free app, small businesses can communicate directly with customers. They can set up automated messages to respond to customers, after business hours, for instance, with information about the business, such as a menu or their company’s location. Businesses can use it to send product pictures and descriptions to customers as well as other information they might be interested in. At present, there’s no ability to pay through WhatsApp, but it’s a feature Meta is considering, a company spokesman said.

Premium features for small businesses — to be rolled out in the coming months — will include the ability to manage chats across up to 10 devices as well as new customizable WhatsApp click-to-chat links to help businesses attract customers across their online presence, the company said in its blog

“We think messaging in general is the future of how people are going to want to communicate with businesses and vice versa. It’s the fastest and easiest way to get things done,” the spokesman said.

Why Main Street business is a focus for the WhatsApp push

Analysts see the broad potential. “Messaging is an international forum that everybody uses on an ongoing basis. It’s massive and it’s growing,” said Brian Fitzgerald, managing director and senior equity research analyst at Wells Fargo Securities.

There’s considerable room for growth in the U.S., where WhatsApp is still a “a largely untapped resource by small businesses,” said Rob Retzlaff, executive director of The Connected Commerce Council, a non-profit organization that promotes small businesses’ access to digital technologies and tools.

That’s something Meta sees changing over time. “We are deep believers that that behavior will continue to grow all over the world,” said Sheryl Sandberg, the company’s chief operating officer, on its second-quarter earnings call on July 27. The company estimates that 1 billion users are messaging with a business each week across WhatsApp, Messenger and Instagram. 

The need for free and low-cost digital tools for small businesses is underscored by a 2021 report from The Connected Commerce Council. The report noted that about 11 million small businesses would have closed all or part of their business if not for digital tools that allowed them to continue to operate. 

One driver for Meta in promoting WhatsApp Business is advertising revenue. “Click- to-message is already a multi-billion dollar business for us and we continue to see strong double-digit year-over-year growth,” Sandberg said on the second quarter earnings call. Click-to-message “is one of our fastest growing ad formats for us,” she added. The company does not break out how much of the business comes from WhatsApp versus Messenger or Instagram.

Businesses like this format because it’s “an inexpensive way to interact [with consumers] that feels a little more personal,” said Stifel’s Kelley. What’s more, it also alleviates a problem caused by the privacy change Apple made to its iOS operating system last year. 

Say, for instance, a customer views a Facebook ad for a sneaker retailer and connects directly with the business through WhatsApp. “In a world where we’re trying to do more and more with less and less data, there’s no leakage here. Everything’s protected,” Fitzgerald said. “Nobody [else] in the world knows I bought these sneakers and there’s a direct business-to-consumer connection." 

Moreover, by offering premium services, Meta could boost revenue, at least incrementally, Kelley said.

José Montoya Gamboa, owner of Malhaya in Mexico, who has been using the free business app for several years, said he plans to pay for the premium version when it becomes available because he likes the ability to use it on multiple devices.

But Geraldine Colocia, community manager at Someone Somewhere, a certified B Corporation that collaborates with hundreds of artisans around Mexico, isn’t sure. She’s been using the free version of the app for more than two years, and would consider paying for it, but the decision will turn on the actual features and the pricing, she said.

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