• Facebook bought WhatsApp ten years ago for $22 billion.
• WhatsApp is finally starting to look like a real business for parent company Meta.
• The messaging app is fueling Meta’s non-ad revenue growth.
• It’s a win for Meta’s broader strategy of monetizing DMs in its apps.

Meta lost $22 billion WhatsApp ten years ago. Today, his crazy bet on messaging is finally starting to bear fruit.

During her third trimester call for resultsthe company said WhatsApp was the main driver of a 48% year-over-year increase in non-ad revenue across its family of apps.

This is mainly due to WhatsApp’s business messaging product, which allows businesses to pay to chat with current or potential customers. Since the third quarter of 2022, Meta has repeatedly cited business messaging WhatsApp as a key source of revenue growth. But it hasn’t been easy.

“It’s a really big challenge,” says Matt Idema, former vice president of business messaging at Meta. told BI in a 2022 interview on the monetization of the application. “How do you build a business from this existing email product?” »

Since then, efforts to strengthen business messaging have gradually started to work in Meta’s favor.

Non-ad revenue is only a tiny fraction of the total pie, adding $434 million in the third quarter compared to $39.9 billion in total meta ad revenue. But its business is growing at twice the rate of the company’s advertising business, suggesting opportunity.

Mark Mahaney, a senior technology analyst at Evercore ISI, has been tracking Meta’s monetization of its messaging products, including WhatsApp, MessengerAnd Instagram Direct — for several years.

“They own the two biggest messaging apps in the world and monetization there is still at a very early stage,” Mahaney told Business Insider. “My guess is that it now represents 10% of their total revenue and is probably growing much faster than both of their social media assets.” A Meta spokesperson declined to comment on the estimate shared by Mahaney.

Messaging, generally speaking, is “the most interesting under-monetized asset that they have,” Mahaney added, especially given the large number of users interacting in DMs.

In October, at an event in Austin, Texas, head of Facebook Tom Alison said the company saw a 100% year-over-year increase in content shared via DMs, what Meta calls “private sharing.”

In addition to business messaging on WhatsApp, Meta generates ad revenue from sponsored messages in the Chats tab of its Messenger app and through “click to message” ads that send users to DMs with businesses on WhatsApp, Messenger and Instagram.

“Now the question is: are they able to accelerate the monetization of WhatsApp?” Mahaney said. “I think it’s becoming clearer and clearer that that’s the case.”

Generative AI could increase the efficiency of Meta’s messaging business in the future, Meta CEO Mark Zuckerberg told investors in April.

Meta’s AI technology could become a “massive business,” Zuckerberg said, including “scaling business messaging, introducing ads or paid content into AI interactions, and ability to pay to use larger AI models and access more compute.”

Users spend more time in DMs

Turning messaging into a money-making tool could be a huge win for Meta, which has invested billions in the category. It may also be a business necessity as more users choose to share content in direct messages, or DMs, rather than in-app feeds on Facebook or Instagram.

“More and more shares will move from feed-based formats to messaging-based formats,” Adam Mosseri, head of Instagram, said in a June statement. interview.

Outside of Instagram and WhatsApp, Meta is adding more features to its Messenger app, such as community chats that work similarly to a Discord channel, giving users “memories” of photos shared in Messenger and more of AI tools.

Still, each of Meta’s messaging products is markedly different in who it connects to, where people use it, and how Meta can monetize it.

“The products themselves are not integrated, but a lot of the features that we develop, to the extent that we understand that the needs of the people in the market are the same, we build them in parallel,” said Loredana Crisan , responsible for messaging. products on Facebook and Instagram, told BI in October.