Several are now scouting for alternative avenues to connect with customers directly, as the Meta-owned company presses ahead with furthering “monetisation” of WhatsApp for Business.
The new rates will require businesses to pay different prices based on the nature of communication. They will now be charged Rs 0.3082 for every utility message, while marketing messages will cost Rs 0.7265. Previously, WhatsApp charged a flat Rs 0.48 per conversation. The pricing for authentication messages will be announced later, the company said on its website.
“The price increase certainly impacts us. We are internally seeing how we can minimise conversations and make them more effective,” said Pallavi Utagi, founder and chief executive of SuperBottoms that sells ecofriendly and reusable cloth diapers.
Meta chief Mark Zuckerberg has previously pointed to business messaging as being a “major monetisation opportunity.”
ETtech‘Sticky and Ubiquitous’
He also said it would be one of the company’s key investment areas for 2023.
India is the biggest market for WhatsApp, with nearly 500 million users. At the end of 2022, WhatsApp for Business downloads had crossed 300 million in India. More than 40 million users view the business catalogue in the app monthly, according to estimates by market research firm Counterpoint.
For small entrepreneurs like Utagi, the ubiquitous nature of the messaging app allows them to foster strong ties with customers. “With this price hike, we will have to see how we deal with a lot of these conversations that are not related to sales but are more around relationship-building. I see them becoming more transactional,” she said.
WhatsApp Business API, launched by Facebook in 2018, allows businesses to broadcast as well as receive unlimited messages from a global audience.
In February this year, WhatsApp announced a new business pricing, wherein the conversation-based model would shift from two conversation categories (user and business-initiated) to four. Accordingly, business-initiated conversations will be split into utility, authentication and marketing, while user-initiated ones that help in resolving customer queries will be called service conversations.
Experts point to WhatsApp having grown to become one of the key channels that brands use for sale, customer support and client engagement. “It is sticky and ubiquitous, which makes it more of a monopolistic channel that can afford to charge a premium,” said Neil Shah, vice-president at Counterpoint Research. As a result of the large volume of transactions on the channel, Meta could be considering significant cost-to-scale infrastructure, along with the requisite security protocols, he said.
“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 said in a statement to ET.
Big Impact
Business owners, however, point to the burden of increased costs for both customer acquisition and retention from the new pricing model.
“This change coming into play means we are going to have to spend more, which is why we’re scared because it is another expense that we have to worry about,” said Sujata and Taniya Biswas, cofounders of textile and saree brand Suta. “But we depend a lot on WhatsApp and despite the price increase, we have to factor it in because we are so used to it and our customers find it to be the easiest channel to stay in touch with us.”
The ‘chat-like’ interface, coupled with the opportunity to send photos and videos, along with shopping links, makes WhatsApp, “a very effective marketing tool,” they added.
Jio Platforms-owned Haptik, which creates business commerce platforms for brands within WhatsApp, said the bot (automated service) that it created for retailer JioMart allows users to complete their grocery shopping on WhatsApp. It claims to receive 1,500 average daily orders, with a 68% repeat rate and 15% conversion rate.
“These price changes are substantial, given the wide reach of WhatsApp Business Solutions. While it’s great that utility messages are getting cheaper, with marketing messages becoming more expensive, brands will see the RoI (return on investment) over the first few months before deciding a long-term strategy,” said Aakrit Vaish, cofounder and chief executive of Haptik.
Meanwhile, some other small business owners such as Sleepy Owl Coffee said their focus will remain on Google, Instagram and Facebook as primary advertising channels, whereas WhatsApp will be used more ‘cautiously and judiciously.’
“One can’t overuse or abuse WhatsApp messaging like SMS or email because it can get red-flagged,” said Arman Sood, cofounder of Sleepy Owl Coffee. “We use it more as a conversational channel and not a promotional and marketing channel, so this move will not impact us massively.”
Some other business owners like Shiv Shankar Ganesh, founder of Kaching.club, which rewards users on referrals to friends on brands, stores, and apps, said that “maybe a reset is in order as businesses need to build more pull since push has saturated.”
“Increasingly, we’ll continue to react less to ads, and revert to the mean of listening only to those we trust (friends, colleagues, and connections on social media),” he said. “I’m bullish on the future of word of mouth more than anything else.”
