The WhatsApp Founders Hate Ads -- And That's a Good Thing for Facebook

As the Social Media Insider likes to go against the grain, here’s what she likes most about the fine print in Facebook’s $19 billion WhatsApp deal: that WhatsApp actually relies upon a subscription model.

In the big scheme of $19 billion technology deals, it’s a small-fry revenue stream -- $1 per year per user, with the first year free. Still, it’s a sign that no matter what evolves -- or doesn’t -- on the advertising front, WhatsApp has opened a crucial portal to future revenue. Keep in mind that while WhatsApp doesn’t record personal data, it does allow for archiving of what’s shared, and you can see how such a service could effectively charge for cloud-based storage of shared photos, videos and texts.

But the decision to be a fee-based service is as much a matter of setting a new consumer expectation as it is about the actual money coming in. If you look at the short history of digital communication, it’s typified by -- from a consumer perspective -- an unwillingness to pay for anything, from Skype to one’s favorite newspaper’s website.

While this has changed to a degree, I’ve often found the reliance on and expectation of ad revenue by media companies, social networks and other content companies to be unsettling. It presumes that users don’t mind ads that much, that advertisers’ budgets are bottomless, and that online advertising is effective. Just ask any site that has relied on online display ads whether that is always the case. It’s only recently that some major players -- like The New York Times, and Hulu, for instance -- have also chased a subscription revenue stream, and while the revenue doesn’t always make up for ad revenue shortfalls, it certainly helps build in the kind of recurring revenue that advertising does not.

Which brings me back to the Facebook/WhatsApp marriage. If there was ever an opportunity for the Facebook platform itself to charge its users -- maybe in return for no ads in the News Feed? -- that time has probably passed, even though it’s obvious that given Facebook’s MAUs (monthly active users), the social network is of immense value to most of its 1.1 billion users on an ongoing basis. While Facebook never would have grown as fast if it were a paid service, building a model where advertisers carry the freight is also a missed opportunity.

If you think I’ve gone off the deep end, here’s the thing: the WhatsApp founders agree with me, and it certainly hasn’t stunted their growth. At 450 million users, it is purportedly growing faster than Facebook ever did. Additionally, its founders hate advertising. Download the app and you’ll see what I mean. During the sign-up process, you’ll see a prominently displayed link that says simply, “Why we don’t sell ads.” The page it links to starts off -- provocatively -- with the following quote from the character Tyler Durden in the movie “Fight Club”: “Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need.”

What the WhatsApp founders write on the page after that is no less of an anti-advertising manifesto. A few choice excerpts:

  • “No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they’ll see tomorrow.”
  • “Advertising isn’t just the disruption of aesthetics, the insults to your intelligence and the interruption of your train of thought.”
  • “Remember, when advertising is involved you the user are the product.”

And finally:

 

  • “When people ask us why we charge for WhatsApp, we say, ‘Have you considered the alternative?’"

Strangely, the alternative is a service like Facebook, which constantly has to balance user experience with ads, and maybe the downsides of that model are part of what Mark Zuckerberg was thinking about when he bought WhatsApp. With the possible exception of Google, any online company that relies solely on advertising revenue is a sucker.

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4 comments about "The WhatsApp Founders Hate Ads -- And That's a Good Thing for Facebook".
  1. Grant Bergman from SurveyConcierge.com • GrantBergman.com , February 24, 2014 at 3:08 p.m.
    Couldn't agree more. What Facebook really does as it "constantly has to balance user experience with ads" is train users in ever-more sophisticated and annoying ways to ignore sponsored messages. Old school advertisers learned long ago that just forcing consumers to be exposed to ads is not enough: there has to be a payoff that justifies hijacking user / viewer / reader attention from people who are present for something completely different from consuming ads. Right now there is no entertainment value and little informational value to Facebook ads, which makes them very easy to ignore. Which of us, with our consumer / user hats on, thinks this is a good approach to advertising?
  2. Rick Monihan from None , February 25, 2014 at 9:13 a.m.
    Multiple revenue streams are always preferable, and a subscription audience is a qualified audience. At some point, most subscription vehicles will seek to add some kind of advertising component so they can keep the subscription fee as low as possible. The WhatApp founders have some interesting quotes, but the one implying the user is the product is very far off base. I don't go to sleep think about the ads I'll see and I don't get excited to see ads, but the recent Super Bowl indicated people ARE very interested in advertising, given how many people shared some of these - such as the Budweiser ad. There's a place for advertising, and it isn't always disruptive or insulting. That's a very subjective and broad way to describe the impact of advertising. Good advertising can be enjoyable, and I'm sure the WhatApp founders could probably cite one or two examples of ads they enjoyed in their lifetime. The difference, of course, is that WhatApp may not be the best platform for the current forms of advertising. But if one were to make itself available which was modestly accessible for WhatsApp users, I would be willing to bet the farm it would be utilized.
  3. Al DiGuido from Optimus Publishing , February 25, 2014 at 11:23 a.m.
    I find this outright anger and hostility around advertising miopic. As someone who has spent my career in the advertising business, I understand that there is a minority of folks who have disdain for those who use commercial means (thru all sorts of advertising media) to market and sell their products/services. Heck not sure that Media Post would survive without an advertising revenue stream. Advertising is always intrusive by its very definition. Without it in our world..so many companies would lose sales, revenues and profits. In a world where we complain about a sluggish economy and loss of jobs..this sort of anti advertising movement and thinking robs our country and economy of jobs and the ability for many of us to be gainfully employed. There have always been pundits who have wanted to end...advertising displays at every level. With all of the problems in our world..Kiev, Syria..world hunger..etc..The fact that we speak in disdain about THIS issue is sickening really. How dare we be SO infatuated with a world without ads and glorify those that "hate" advertising. If we are to hate...that's deplore and take action around all of the atrocities and challenges that members of our human family face each and every day in this world. The "annoyance" of intrusive advertising within various content venues wouldn't make the top 50 list of challenges on a world scale...
  4. Grant Bergman from SurveyConcierge.com • GrantBergman.com , February 25, 2014 at 3:59 p.m.
    Al, I think it's "outright anger and hostility around [BAD] advertising" – not all advertising, per se – that lights up most of us here on MediaPost. For my own part I think most of Facebook's ads qualify.