This week, Facebook’s (NASDAQ:FB) WhatsApp marked a major milestone and topped 2.0 billion active users. The milestone reaffirms WhatsApp’s status as a star digital asset for Facebook. Also, the app’s audience milestone is a relief for Facebook investors. They have been concerned about the company’s future due to the ongoing TikTok onslaught.
TikTok has emerged as a major headache for Facebook. Notably, TikTok is growing its audience quickly, poaching Facebook employees, and taking Facebook’s advertising customers.
WhatsApp isn’t joining Facebook in the advertising market yet
Still, the WhatsApp audience milestone doesn’t mean much for Facebook. The company dropped its plans to bring ads to WhatsApp this year, which would have allowed it to make the most of WhatsApp’s huge audience.
Advertising is the real deal for Facebook. Last year, Facebook generated $69.7 billion in advertising sales, which contributed about 99% of its total revenue. Although the competition has intensified in the digital advertising market, there’s still a huge revenue opportunity there. Spending on digital ads worldwide is on track to hit $385 billion this year from $333 billion last year. By 2023, the global digital advertising market will top $517.5 billion.
In WhatsApp, Facebook had a great asset in the battle for digital advertising dollars. At 2.0 billion users, WhatsApp’s audience is way larger than Twitter (NYSE:TWTR), which had 330 million monthly active users and 152 million daily users. Twitter, with its much smaller audience, generated $3.0 billion in advertising sales last year.
However, Facebook decided to keep WhatsApp out of the advertising market. The company will likely forgo billions of dollars in potential advertising sales.
India clears rollout of WhatsApp Pay
However, not everything is lost. WhatsApp is exploring other revenue opportunities outside advertising. For example, WhatsApp provides premium chat tools for corporate clients. Additionally, the company has built a mobile payment service called “WhatsApp Pay” that’s starting to rolling out. WhatsApp Pay has been on a trial run in India since 2018. Last year, the service reached about a million users. This week, the Indian regulator cleared WhatsApp to start rolling out its payment service to more people in the country.
India is one of the world’s fastest-growing digital payments markets. The country’s digital payment market is on course to hit $1.0 trillion in 2023 from $200 billion in 2018. However, a big fight awaits Facebook’s WhatsApp in India’s digital payment market. Google (NASDAQ:GOOGL) and Alibaba-backed (NYSE:BABA) Paytm has a large head start in India. As a result, Paytm already has a wide lead.