WhatsApp is overhauling how it charges businesses with new conversation categories and changes to its free tier from June 1, 2023, as parent company Meta looks to accelerate monetisation from the messaging app.
WhatsApp is introducing three new categories in business-initiated conversations: Utility, Authentication, and Marketing. A conversation is defined as unlimited interactions in 24 hours.
Utility messages inform customers about an ongoing transaction, such as post-purchase notifications and recurring billing statements, or a specific agreed-upon request, whereas authentication messages allow businesses to authenticate users with one-time passcodes.
Any conversation that does not qualify as utility or authentication will be classified as a marketing conversation, which includes promotions or offers, information-related updates, or invitations for customers to respond/take action.
Businesses are currently charged a flat Rs 0.48 per conversation; however, beginning June 1, 2023, they will be charged based on the category of the conversation. Utility messages will cost Rs 0.3082 per conversation, while marketing messages will cost Rs 0.7265 per conversation. Pricing for authentication messages will be announced later, prior to the June 1 launch, according to a note on the company's website.
"We charge businesses using our WhatsApp Business Platform for the conversations they have with their customers, and make occasional adjustments to our offerings to better reflect the ways in which the service is used and the types of information people are choosing to receive" a WhatsApp spokesperson told Moneycontrol.
On its website, WhatsApp also stated that conversations containing both utility and marketing content will be classified as marketing conversations. Furthermore, the company said that it will differentiate between messages from different categories sent within the 24-hour window.
For example, if a marketing message is delivered during a utility conversation, it will initiate a separate marketing conversation for the next 24 hours. Businesses will be charged for a single service conversation and a single marketing conversation as a result.
"Our pricing is changing to reflect the different value each of these experiences drives for businesses and people. Marketing conversations drive incremental sales, while utility conversations facilitate existing sales," it said.
Read: WhatsApp's Business bet takes off in India, revenues set to cross $1 bn next year
While the new pricing will kick in from June 2023, businesses will be prompted to select categories for their messages starting April 2023, the company said in the note.
In addition, WhatsApp is excluding business-initiated conversations from its free tier, which offers businesses the first 1,000 conversations per month for free.
User-initiated conversations are being renamed service conversations and will be charged at the same flat fee of Rs 0.2906 per conversation. According to the company, each WhatsApp Business account (WABA) will receive 1,000 free user-initiated conversations per month.
On the other hand, WhatsApp will extend the free conversation window for businesses from 24 hours to 72 hours beginning March 1, 2023, when users message businesses via "Click to WhatsApp" ads or Facebook Page call-to-action buttons.
Diversifying beyond ads
These developments come as business messaging has become strategically important for the Facebook parent over the past year or two, as it looks to diversify its revenue sources beyond traditional digital advertising that took a major hit in 2022 due to the global economic downturn and impact from Apple's iOS privacy policy changes.
Mark Zuckerberg, the chief executive officer of Meta, has previously referred to business messaging as a "major monetisation opportunity" and one of the company's key investment areas for 2023. In October 2022, Zuckerberg announced that Click-to-WhatsApp ads had surpassed a global run rate of $1.5 billion, growing by more than 80 percent annually.
India is the biggest market for the Meta-owned messaging app with over 400 million users in the country. The app is set to hit revenue of $1 billion in India by the end of 2023, Moneycontrol reported in November 2022.
Lesser spam messages?
The growth of WhatsApp Business has also resulted in an increase in the number of unsolicited promotional messages received by users from brands on WhatsApp.
These new changes and the increased cost to send marketing messages to consumers could lead to reduced promotional messages, industry watchers told Moneycontrol.
Moneycontrol reported in October 2022 that Meta is developing tools and systems to combat this issue, in addition to working with businesses to ensure that users only receive relevant communications.
WhatsApp plans to give users the option to opt out of receiving specific types of messages from businesses, such as coupons or promotions, giving them more control over the messages they receive. The addition of these new categories could be the first step in this direction.
Note: The story has been updated with WhatsApp's response.
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