Meta Struggles To Boost WhatsApp Revenue Despite 400 Million Users In India

WhatsApp , owned by Meta, grapples with a significant challenge in India, where it boasts a massive user base of 400 million users, the largest in the world. Despite its substantial user numbers, WhatsApp's revenue performance in India lags behind countries like Brazil, raising questions about its monetization potential. Meta, formerly known as Facebook, is faced with the dilemma of how to increase revenue from WhatsApp in India.

For many Indians, WhatsApp is an integral part of their daily lives, connecting them with friends, family, and services. Nikila Srinivasan, Global VP of Business Messaging at Meta, highlights the significance of WhatsApp as a platform for everyday conversations in India. Her role involves exploring avenues to monetize WhatsApp.

The acquisition of WhatsApp by Mark Zuckerberg in 2014 for $19.6 billion raised eyebrows, but Warren Buffett endorsed the move, stating that if Zuckerberg believed in WhatsApp, it was a sound decision. However, despite WhatsApp's immense popularity, its revenue falls far short of Facebook's Instagram, which earned an estimated $51.4 billion in 2022, primarily through ad-based monetization.

WhatsApp has made various attempts to generate revenue, including charging users $1 per year and launching WhatsApp Pay, where businesses pay a 3.99% fee on transactions. However, these efforts have not been as successful as anticipated, particularly in India, a market known for its price-conscious users.

According to Barnik Chitran Maitra, Managing Partner at consultancy Arthur D. Little, India's complex market dynamics present challenges for monetization. WhatsApp's encrypted messaging platform is not conducive to traditional ad-based revenue models, and privacy concerns prevent the platform from offering personalized data for targeted advertising.

Maitra further emphasizes that only a limited number of Indian households are willing to pay, making it a challenging business model to crack at scale. Despite these challenges, both WhatsApp and Meta remain committed to their plans for India.

WhatsApp currently has over 2 billion monthly active users worldwide, with India being its largest market, boasting more than 400 million users. While its revenue in India is approaching $1 billion, Meta sees immense potential in the Indian market for monetization.

Meta's India head, Sandhya Devanathan, underscores India's significance as a priority market for both monetizing WhatsApp and driving innovation. She acknowledges the challenges of providing good user experiences and emphasizes the importance of users' consent in business messaging.

Meta introduced the WhatsApp Business App in 2018, which currently has over 1 million businesses in India. This app allows businesses to create profiles, link their websites and Facebook pages, and engage with users. Meta also offers a subscription service, WhatsApp Business Premium, with advanced features.

WhatsApp's major revenue source is the WhatsApp Business API, which businesses use to automatically respond to customer queries, send shipping confirmations, and facilitate payments. This API charges businesses per conversation within a 24-hour session.

WhatsApp's monetization strategy in India includes WhatsApp for Business, WhatsApp Flows, and WhatsApp Payments. It has gained popularity among users and businesses for its simplicity and ease of use.

Market research firm Chrome Data Analytics and Media notes that WhatsApp for Business is paving the way for messaging service monetization in India. Kantar's research indicates that daily conversations between people and businesses have more than doubled in India over the past year, with 80% of consumers preferring messaging as their primary means of communication with businesses.

Despite the challenges, Meta remains focused on India's potential as a major growth driver. They see opportunities in sectors like banking, financial services, insurance, and e-commerce, among others. Speech-to-text technology is expected to play a crucial role in enhancing business messaging.

Channels, a recently launched feature, offers admins the ability to send messages, photos, videos, and polls to their followers, potentially becoming a new source of revenue for Meta. The company is keen to observe how customers organically use its products to drive innovation.

The key question remains whether WhatsApp's vast user base in India will be willing to spend money on the platform, a question that Meta hopes to answer positively as it seeks to enhance monetization opportunities.