Messaging: WhatsApp’s business case could lift wider sector

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Private messaging has already evolved from social interactions to workplace communication. The next stage is connecting businesses to customers. Meta’s renewed interest should drive up investor demand.

San Francisco-based Intercom, founded in 2011, illustrates the sector’s lengthy incubation. Its services help companies engage with customers in real time on their own apps or websites. By 2018 it reached unicorn status, with a private valuation over $1bn. Since then, its valuation has stalled and it has cut staff. The return of founder Eoghan McCabe as chief executive has been marked by clumsy public communications.

This trajectory echoes excitement around Meta (then Facebook) buying messaging service WhatsApp in 2014 for $19bn. It remains the biggest acquisition the company has ever made. Meta jettisoned subscriptions and made the service free. It has grown to more than 2bn daily users around the world. But revenues are not yet large enough to be broken out. 

The app’s simple layout makes advertising tricky, though peers such as Japan’s Line have found success with promotional messages. Video ads can be shown in the “status” feature too. Plans to enable payments between customers and merchants have been slow to take off but remain another prospective money spinner. 

In the past year, however, Meta chief executive Mark Zuckerberg has grown more focused on paid-for business messaging. This, he says, could be the potential next pillar of the $775mn business. 

WhatsApp generates revenues with linked adverts on other Meta apps. So far, 200mn businesses use WhatsApp for Business monthly, about 5 per cent of Meta’s total. It has quadrupled in size in two years.

No figures are given for the number who pay to chat with customers. Convincing users to pay for something that is free elsewhere is difficult. Raising demand requires additional services. Generative artificial intelligence could be the answer. Integrating large language models into WhatsApp would automate customer responses. Intercom is also touting its use of AI.

If Meta’s push to monetise WhatsApp continues it could lift valuations across the wider sector.