Source: Translated finger Chan (ID: yizhichan 007)
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From 2012 to 2015, the author works for Wechat. He will analyze the realization process of WhatsApp's tangle from the perspective of competitors, the success, feasibility and potential impact on users of each measure.
Look at the article from Factor Daily:
WhatsApp is the only information flow application that has more than a billion active users a month but has not yet begun to realize.In November 2016, WABetaInfo reported on the new features released in the beta version of WhatsApp, which is said to have Snapchat Stories-like features. I thought that this interesting feature helped to turn WhatsApp's ads into reality, and that prediction came true in August 2018, as you can see on my Facebook and Twitter.
Although WhatsApp has always opposed any advertisement, I think Stories is a form of public information flow that introduces non-repellent advertisements on the premise of not infringing users'privacy.
Take the daily experience of private trust as an example. Inserting advertisements in the conversation process can be disgusting and may make users who use WhatsApp in emergencies very uncomfortable, such as when they need emergency help from relatives and friends in case of a medical accident.
WhatsApp, as a highly user-focused company, does not seem to use advertising to undermine the private trust experience. WhatsApp boasts an acquisition value of $23 billion, but there has been no significant liquidity gain.
To be sure, I'm not the only one who thinks so. Parmy Olson, a Forbes correspondent, interviewed two founders of WhatsApp, who made the same prediction in February 2017 (my prediction was in November of the previous year) by placing ads in WhatsApp through functions similar to Stories.
WhatsApp announced in August 2018 that it will use WhatsApp Status to place ads on its platform.WhatsApp Status is a simple flow of content information in its application. The content published by users on WhatsApp Status will disappear after 24 hours, similar to the Stories functions of Facebook, Instagram and Snapchat.
In addition, WhatsApp will also launch a business API account to help advertisers reach target users on WhatsApp, while allowing advertisers to place ads on Facebook to talk directly with target users on WhatsApp. These three initiatives are expected to open the way for WhatsApp to cash in.
(Note: From 2012 to 2015, I worked for Wechat, an international competitor of WhatsApp.)
However, WhatsApp's realisation story is not just about advertising on a 1.5 billion user platform.
This anti-advertising application is used by smartphone users worldwide to communicate with each other.And it is gradually replacing SMS (operator short message service).
When Facebook acquired WhatsApp in 2014, it promised that WhatsApp would be completely independent, and the platform also introduced encryption from the terminal to the terminal, making it almost impossible to implant any form of advertising on WhatsApp, because the application did not and could not capture any meaningful data to support target advertising positioning. Early signs indicated that WhatsApp would continue. Its original mission.
However, in the more common case of malicious acquisitions, continued pressure from Facebook has led to data sharing between WhatsApp and other Facebook products. As I will explain in detail later, the move greatly weakens WhatsApp's anti-advertising stance and leaves the company's founders in great disappointment and pain to opt out.
With the development and growth of WhatsApp, it has also become a hotbed of false news.Let the mobs who produce unproven false information threaten democracy in a way that deceives people and kills people.
WhatsApp is still a favorite application for billions of people anyway. However, the contradiction between respecting users'privacy and embedding profitable advertisements, as well as the contradiction between direct communication between advertisers and users and the control of the proliferation of false and spam information, remains to be solved, which may be the reason why the company has not yet publicly launched the platform cash flow plan.
In this paper,I'll also analyze the success, probability and potential impact on WhatsApp's users of each of the liquidation initiatives announced by WhatsApp.
WhatsApp's Anti-Advertising Manifesto
WhatsApp was known for its anti-advertising manifesto at the beginning of its founding.
Brian Acton, one of the two co-founders of WhatsApp, hates advertising from the bottom of his heart and is the co-founder and CEO of WhatsApp.
Brian Acton's notes are still on Jan Koum's desk (source: Sequoia Capital)
From a liquidation point of view, WhatsApp was originally free on all platforms except iOS, which cost $1 for lifetime access (later changed to an annual subscription fee of $1). After Facebook's acquisition, WhatsApp is free on all platforms.
As for liquidity, Koum explored revenue models based on ad-free models in an article posted on WhatsApp blog, he wrote:
Starting this year, we will test tools that allow users to communicate with advertisers or business organizations they want to reach through WhatsApp.This means consulting your bank about the fraudulence of recent transactions and airlines about flight delays will become a reality.
Consistent with its previous emphasis on user privacy,WhatsApp even launched terminal-to-terminal encryption on the platform in April 2016.
Another mode of realizing information and social applications was invented by Tencent, which founded Wechat.Wechat is a super popular information flow application in China, and Tencent has built a super application ecosystem covering a series of products such as taxi, payment and e-commerce, which has achieved the peak of information flow experience.
Tencent is one of the largest game companies in the world. It uses social networking as the information delivery layer to help users discover and play games with their friends and communities. But up to now, WhatsApp has never shown any tendency to build such super application ecosystems or game platforms, and has always adhered to its technology-focused business principles.
How WhatsApp Embraces Advertising
However, it was in April 2017, after the end-to-end encryption of WhatsApp platform was completed.Facebook changed its position and forced WhatsApp users to share some personal data nodes with FacebookOtherwise, it will stop using WhatsApp synchronously, leading to disagreements with the two co-founders until they leave.
This data sharing includes mobile number key data nodes and other specific information, such as the latest view, device identification number, operating system and the objects that may be chatting with users, etc.
Facebook claims to do so in order to reduce spam on WhatsApp, improve the user experience by providing better suggestions for friends on Facebook, and synchronously optimize Facebook advertising display. Neither WhatsApp nor Facebook explained how the announcement would be implemented. One possible scenario is that if a user chats with another person on WhatsApp, but that person is not a friend of the user on Facebook, the person can be displayed as a suggested friend on the user's Facebook.
Similarly, by prioritizing user's friends'information on WhatsApp (people who often chat with users on WhatsApp), Facebook's dynamic information can be better linked.
In emerging countries such as India, most private-trust dialogues are conducted on WhatsApp rather than Facebook Messenger. Therefore, Facebook can use conversational information on WhatsApp to help enhance the user experience of its suggested friends and dynamic information.
Since Facebook and WhatsApp did not disclose the possibility of such data sharing during their acquisition of WhatsApp, the EU fined Facebook $122 million. But to some extent, the turning point of the story suggests that from now on, Facebook will not be able to be alone, and WhatsApp has become a grasshopper on the rope in the introduction of advertising.
With regard to advertising on WhatsApp Status, I personally believe that fundamentally this does not conflict with WhatsApp's core philosophy. During the acquisition, Koum wrote on the company's blog:
Considering that placing ads on WhatsApp Status does not interrupt the private communication between two users, we can conclude that advertising does not really break the core idea of WhatsApp.
Koum personally does not resent introducing ads on WhatsApp Status, which is not due to Facebook pressure. The story of Koum's last day on Facebook published by the Wall Street Journal also confirms this. The report tells some of the footage of Koum's plenary meeting with WhatsApp and Facebook employees in April 2018:
Facebook's real promise is not to introduce advertising on WhatsApp Status, but to abandon WhatsApp's core values in spite of forcing them to share user privacy data.
Mandatory data sharing is crucial for Facebook to make money from WhatsApp, and it has a deeper impact. Although WhatsApp is a network encrypted from terminal to terminal, today's Facebook basically knows its users well and can pinpoint users precisely on WhatsApp Status to display advertisements, which also violates users'privacy.
Without user data, WhatsApp can't locate advertisements.
Encryption from WhatsApp platform terminal to terminal has become a difficult problem for advertisement publishing, because the content of user conversation information, including voice and video phone, real-time location or WhatsApp status, can not be obtained. Therefore, little information is known except the basic details of the user's mobile number, name (optional), latest viewing time and the mobile number of another correspondent. Although WhatsApp supports GPS location information collection, it does not.
WhatsApp has more than 1.5 billion monthly active users, so publishing ads on its platform needs to address some basic issues related to advertising operations. WhatsApp does not have any location information such as age, gender, interest, behavioral data, etc.
In the absence of advertising positioning, WhatsApp's user experience will be compromised and advertisers'budgets will be wasted.
For example, displaying wet urine advertisements to parents of infants and young children is likely to bring purchasing transformations to wet urine advertisers, but if it is shown to single people or elderly people, the effect will be greatly discounted.
Without high-value user data support, WhatsApp can only choose to rely on Facebook or Instagram to extract user data for advertising.
Given that users are likely to use the same mobile number on WhatsApp, Facebook and Instagram, WhatsApp can obtain target data from the latter two. Both Facebook and Instagram have sufficient user data to ensure the quality of advertising delivery, which is also evidence of the continued growth of Facebook's market share in the era of digital advertising.
Because this strategy relies on using phone numbers as matching criteria, WhatsApp users can avoid receiving advertisements by removing phone numbers from Facebook and Instagram, or simply adding a different phone to Facebook and Instagram's personal information (in countries or regions such as India where dual-card phones are frequently used). It's very easy to operate.
Another option is to use the ad ID, the unique identification code for each mobile device, which is provided by the mobile operating system to support Internet advertising and is also a common identification code for the Facebook application family. WhatsApp is a mobile information flow application (accessing web pages requires WhatsApp mobile applications to be online and networked), and it is also an important part of Facebook and Instagram providing advertisement display on mobile phones. A common advertisement ID can easily identify the same user using the family products of Facebook applications.
On October 17, 2018, WABetaInfo announced a feature in a new beta version of WhatsApp that requires users to associate their WhatsApp account with Facebook or Instagram accounts.
WABetaInfo predicts that the use of this feature will automatically update the user's Facebook and Instagram account dynamics through WhatsApp or sharing the user's WhatsApp status.
The move relieves users of the pain of manually editing and publishing Posts one by one on Facebook's multiple applications, delivers product value to users, and helps to implant content into Facebook's core products, as the number of young Facebook users declines, so does the content of the platform.
However, as an added advantage, the relationship between WhatsApp and Facebook, Instagram accounts also helps to solve the problem of advertising positioning.
In the absence of user permission or user unbundling of Facebook and Instagram mobile numbers, an advertising model based on normal mobile numbers or tracking matching advertising IDs in all Facebook applications would be questioned by regulators, but would not be subject to any regulatory review if users had an account associated with them.
WhatsApp ads are mixed
For the realization of WhatsApp advertisements, it is gratifying to note that the number of users of WhatsApp Status is increasing.
Among many Facebook applications, WhatsApp's Stories feature ranks first with 450 million users per day. Facebook also expects Stories to move beyond dynamic information sharing as soon as possible, which will help WhatsApp liquidate.
Stories Products Active Users Daily
Google Trend Analysis tools can also validate the above data. (Source: Google Trends)
Stories ads, in particular, can now be skipped and users can easily skip them. Facebook expects Stories to replace dynamic messages from a shared perspective, which also worries investors about whether Stories can make a profit for Facebook.
TechCrunch's Josh Constine wants Facebook's many apps to be advertised in Stories in a form that can't be skipped and realized at a high price.
Well-known technology and strategy writer Ben Tompson suggests that Stories have higher video content consumption, which in fact fits perfectly with brand advertising, and Facebook has long tried to transform its positioning from a performance-driven marketing platform to a platform parallel to high-quality brand advertising, which is a better cash-flow option for Facebook.
Although the use of WhatsApp Status seems reasonable, the main user groups of WhatsApp users are concentrated in emerging market countries or regions.For example, India, Brazil, Mexico, Indonesia, Russia and Spain.
The per capita advertising revenue in these countries is lower than that in developed countries such as the United States, Germany and Japan, but the number of users in developed countries is also smaller.
So in the long run, WhatsApp Status advertising seems to be Facebook's champion, and the absolute value of revenue may be low in the short term, but it will change a lot when the emerging market economy develops.
What other ways of realizing it?
The other way to cash in on WhatsApp is through a business API account. Advertisers need to pay a certain amount of money to send messages to users on WhatsApp.These messages are also encrypted from the terminal to the terminal.
This information is more expensive than SMS. Take India, the largest user of WhatsApp, for example, where 200 million active users are monthly.Advertisers pay seven times as much for sending messages on WhatsApp as regular SMS. Nevertheless, advertisers still choose WhatsApp because of its higher information delivery rate.
Compared with other information flow platforms such as Messenge, Wechat and Neighborhood, WhatsApp's business API account experience is different. Users do not have to go to or pay attention to the advertiser's WhatsApp account in person.
Therefore, unlike receiving a transaction warning message after completing an order transaction, users can receive such information on WhatsApp. One consumer said that the advantage of this feature is that users can usually get ticket prices or booking details in the form of rich media such as pictures, rather than in the form of plain text messages.
However, the risk of this approach is that it may become end-user spam in the future.At present, WhatsApp has only released business account API rights to some advertisers.
According to what I know privately from some Facebook account managers, the number of advertisers with this authority in India ranges from 90 to 100, including MakeMyTrip, BookMyShow and others. Given that this service is very similar to the current self-service advertising model where Facebook fan pages and Twitter accounts are already online, this feature increases the risk of spam experience for WhatsApp users.
Whenever a user authorizes acceptance of the advertiser's information, because WhatsApp is not validated on the terminal, a spam company or a company without control can create a new WhatsApp business API account, send spam messages continuously on WhatsApp, and create a new account after the account has been blocked.
Users are notified of each WhatsApp message and interrupt their attention, so the spam problem on WhatsApp is even more serious than on Facebook and Instagram.
To avoid this problem, WhatsApp has to license all business API accounts only to high-quality advertisers. This last link ensures the quality of information, but also means that liquidation is still in a limited state.
Advertisers should adopt entertainment-based scenario models rather than useful information cues. Here I share my personal experience with MakeMyTrip, an online travel agent, which has been sending me spam messages about its currency and loyalty project products.
MakeMyTrip's spam screenshots have been harassing me with loyalty projects and so-called MMTBlack e-wallet information, and I'm not interested in using or understanding them.
How do other information flow applications deal with these problems?
Take Facebook's Messenger as an exampleAdvertisers can only send messages to users who are concerned about them, so they are technically shielded from spam. If the advertiser's account sends too many notifications and information to the user, the user will close the account.
Similarly, Wechat has two advertising accounts.Subscription account and service account. Subscription account can send a message to the user every day, and all information under the subscription account will be pushed to the submenu level, so that the user will not receive any notification or prompt.
If the user is particularly interested in the advertiser, he can enter the submenu to browse the information content and the information pushed to him by the subscription number. The service account only allows one message to be sent every week and the information will be displayed in the main information area.
Usually only a few accounts can be authorized to become service accounts, and the information sent is purely transactional. No matter what kind of Wechat account, only when the user responds to the advertiser's information, the advertiser can respond to the user many times and unlimited times in 48 hours.
If the user complains about the account information or checks, the account is shut down. Whatever the case, Wechat will not charge advertisers for sending messages, so this is not important for application realization.
Furthermore, to control the proliferation of advertising information, WhatsApp may follow its business account model, pushing advertisers'information to the background. But it also means that advertisers will question what they are sending messages on WhatsApp at a price several times higher than that of SMS.
If WhatsApp can support information collation functions, such as SMS inbox collation functions provided by many applications in India (such as Microsoft's SMS Organizer, TrueCaller, PayTm, Walnut and other applications), WhatsApp can improve the user experience (Note: I work in Walnut, a personal payment management manager based on SMS).
Even Apple, which has upgraded its system to iOS 12, is gradually improving its spam message complaint resolution function, which is also open to third-party developers. To sum up, it is still unknown whether advertisers can improve the end user experience by converting their SMS prompts into WhatsApp information.
Finally, WhatsApp's third attempt to cash in is to allow advertisers to place ads on Facebook or Instagram to communicate with users they touch on WhatsApp.
Business communication on Messenger didn't work well at first, and Facebook had to offer additional chat extensions to make up for it. In theory, from the consumer's point of view, it is very convenient to talk directly with advertisers through advertisements or websites. If you put advertisements in Facebook or Instagram dynamic information, the benefits will also be owned by Facebook.
The problem with this type of advertising is that it could undermine Facebook's own advertising model. After all, once users click on Facebook ads and communicate with advertisers on WhatsApp, there is no need for advertisers to put ads on Facebook in the future.
Advertisers can send messages directly to users on WhatsApp and use customized products or services. Therefore, advertisers can use Facebook to send messages to users continuously and repeatedly, which increases the risk of Facebook's core business.
What is the future of WhatsApp payment?
WhatsApp Payment is a feature recently launched only in India, which is its largest user market. WhatsApp Payment is based on Unified Payment Interface (UPI) to support instant transfers between any bank in India.
Other UPI payment tools include PayTm (supported by Alibaba, China), PhonePe (acquired by Wal-Mart) supported by Flipkart, and other banking applications.
WhatsApp launched UPI payment on its application platform six months ago, but it is also the only payment platform that has not yet obtained the necessary permission to pay more than one million users unless it complies with local laws and regulations, such as storing payment data locally in India and providing appropriate multi-dimensional authentication.
Meanwhile,PayTm and PhonePe, WhatsApp's local rivals, have also been lobbying for tighter regulation of WhatsApp to make the latter even worse.
But despite the problems, WhatsApp will eventually be able to launch UPI payments on the application platform, and almost every Indian has a smartphone and network support, so WhatsApp should be able to take a place in the private-to-private payment market.
As India's regulatory system improves and lobbying intensifies, platforms such as Google and WhatsApp (also on behalf of Facebook) cannot use UPI payment data for any non-payment-related purposes, such as creating advertising tags for users.
In the short run, this limits the liquidity potential of WhatsApp payment. In the long run, users prefer to complete payment through WhatsApp application, which makes the user viscous.
In addition, many Indian banks plan to offer small and micro loans to users through an overdraft service, which is also a credit product based on the UPI model, and Google Payment is preparing to launch the function.
WhatsApp can also use the same method, if it can occupy a certain share of the payment market, when users use overdraft service to pay to the merchants, WhatsApp can get a certain amount of borrowing income.
How to predict WhatsApp liquidity?
In many ways, WhatsApp has recently become a problematic child in the Facebook application family.
On the one hand, it has more than 1.5 billion active monthly users who like the app.On the other hand, unproven false news and messages on the platform have caused violence, lynching and riots in many parts of the world.
Harsh Taneja and I mentioned in an article published in Columbia Journalist's Review in early 2018 that WhatsApp can curb the spread of false news without breaking the terminal-to-terminal encryption, and modify content by using only metadata and adding a reporting information function.
In Brazil, although the news has reported how political parties have successfully circumvented WhatsApp's forwarding restrictions through new hacker technologies, some researchers support WhatsApp's measures to increase multiple forwarding restrictions.
WhatsApp's business API accounts are still at great risk that political parties or immoral groups who want to spread rumors will abuse WhatsApp to spread false information to millions of users.
What they need is a business API account from WhatsApp, which, based on Facebook's recent performance, seems very vulnerable to abuse:
Upload a list of phone numbers and declare that all of them have authorized permission to receive information, and then spread false information to millions of users.
Despite WhatsApp's attempt to curb false information, the need to cash in business API accounts leaves the platform open and closed, and in the worst case, life-threatening. So WhatsApp and Facebook need to be cautious.
As WhatsApp still has no revenue source, it is predictable that Facebook's pressure to cash in on WhatsApp continues to climb. According to information released by the public media, citing comments from two co-founders of WhatsApp and Facebook executives, the contradiction between liquidity and respect for user privacy seems to be the fundamental reason why the founder of WhatsApp left.
When WhatsApp was forced to share some basic data, such as phone numbers associated with Facebook, it seemed harmless at first, because WhatsApp still maintained terminal-to-terminal encryption and was outside the scope of Facebook.
But as I explained earlier, this seemingly simple move now means that all user privacy on WhatsApp will be permanently disclosed, and that it will always be a nightmare for WhatsApp founders and other privacy fighters around the world.
As I mentioned in this article, if WhatsApp can solve the problem of advertising positioning and regulatory review, in terms of advertising revenue, the upcoming advertisements on WhatsApp Status will be winners in the long run.
As for WhatsApp's other liquidation initiatives, such as business API accounts, although potentially valuable, there is also the risk of further exacerbation of false news flooding, resulting in potential spam problems, or the potential value of switching from SMS to WhatsApp information for businesses and users may not be proven.
Despite its 1.5 billion monthly active users, WhatsApp still has a lot of problems to solve to prove its $23 billion acquisition value.However, WhatsApp does not have user growth and user viscosity problems, so it still has a lot of time, which is rare in today's world.
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