You may have heard over last week that WhatsApp now has about 430 Million active users. Active, not just registered. But that wasn’t the big announcement they made. The more significant statement, a strategy one, was that their founding belief in a no-ads, and no frills – basically a pure messaging platform – ecosystem remains unshaken. They also take pride in the fact that they have achieved these number without themselves spending a dollar on advertising the service.
This is remarkably differently from their emerging competitor, WeChat. WeChat has embraced advertising their service as an awareness and expansion strategy into markets like Asia and Africa. WeChat also believes in advertising on their platform. Not so directly in terms of banner ads and such right now, but they clearly don’t have problems partnering companies that need to use the platform as a channel for business – coupons, payments services, gifts, and the like. Add games to that and you have an anti-WhatsApp!
We’ve wondered here before if this makes WeChat bloated with non-essential frills or if this makes it much more interesting than their competition. WhatsApp’s announcement last week however got us thinking – this may actually be a mistake that this global leader in messaging is making. A ‘no ads and no frills’ strategy may make a lot of sense in developed markets like the US where consumers are tired from decades of spam (in physical mailboxes & email) and advertising, but this may not be the case with emerging markets.
A year or so ago, a friend made an interesting observation while we were watching the news on of one of India’s top tv channels, NDTV. About every 20 seconds or the channel would have about 5 minutes of ads. Lots of ads. Like 20 or so at a time in rapid succession, maybe 15 or so seconds each. And it was by global companies like Samsung, Canon, Jeep etc… The friend pointed out that they are doing this, not because they are able to get away with it as commercial mode, but because both the advertisers and possibly the consumers watching the TV, probably don’t mind lots of ads.
We laughed that 20 ads in rapid succession on CNN or BBC on the other hand would be unthinkable. Their viewers would revolt!
The reason, we’ve mused, is that emerging markets have a very aspirational consumer base that actually doesn’t mind discovering new stuff through ads and frills stuff. They have newly graduated themselves into a middle class that is increasingly growing but is also increasingly hungry to discover new services, and to consume frills stuff they didn’t even know.
A WeChat, bloated as it may be with games, stickers, payments services and the like, is a actually a great one stop app for these things. WeChat is providing locally relevant content and solutions that never don’t exist in other apps. It’s so much unlike the US or Europe where a matured ecosystem means there’s a dominant (locally relevant) games app that people rely on, a coupons app, a payments service and other such. WhatsApp is right to not want to bloat their app with stuff that’s already done very well by other apps.
This is why these frills components easily go viral in emerging markets. Well, in China for now. But the numbers favour of the future favour emerging markets like China. In terms of population, Africa is a billion. Asia, 4 billion, and South America almost half a billion. North America and Europe no the other hand account for just over a billion. And it makes us wonder if WhatsApp’s strategy is smart into the future.
A big mistake by WhatsApp? Please share your opinion in the comments below.