Will WhatsApp be able to sustain its no-advertising policy?

When WhatsApp was founded in 2009, its motto was: no ads, no games, no gimmicks. Its co-founder, Jan Koum, was especially against the invasion of advertising. However, following its $19 billion acquisition by Facebook last year, people have started to wonder how the investment can be financially justified if the messaging app were to continue its no-advertising policy.

For WhatsApp, the mobile texting space is filled with rivals such as Line, WeChat, KakaoTalk and Tango—apps that are constantly striving to monetize through different channels. Line is known to derive 20% of its revenue from selling virtual stickers while Tango has introduced native ads; on the other hand, WhatsApp makes money from selling $0.99 yearly subscriptions (with free access for the first year) for its service. As the market leader, WhatsApp is able to operate without offering other premium features, but the same business model will be hard or even impossible to replicate for other apps that try to follow WhatsApp’s lead.

Typically, mobile texting apps try to generate revenue through the following channels: selling stickers, creating games around chat with in-app purchase elements, and promoting the purchase of real-world goods. The chart below shows a comparison of the business models used by various apps:

Source: http://wattsjones.org.uk/post/61010619439/messagingappmonetisation 

While WhatsApp owns a large user base, the company’s revenue might only be hundreds of millions of dollars—leaving an unfilled gap between hundreds of millions and $19 billion. Unsurprisingly, there have been indications that WhatsApp has gradually started to loosen its no-advertising policy as it starts to explore possible marketing channels. According to Forbes, some brands could be allowed to message WhatsApp users once they have been granted permission by the company, and it is also considering charging airlines and brands like Uber to message its users. Regardless, if WhatsApp policies do change, it would not be the first time a tech company that rebelled against marketing grew to be reliant on advertising—with the likes of Facebook, Google, and Twitter being its predecessors.