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WhatsApp Field-Trials Business Chat

By Richard Adhikari E-Commerce Times ECT News Network
Mar 14, 2017 5:00 AM PT

WhatsApp has been conducting tests of a business chat system with a number of companies that are part of the Y Combinator startup incubator, Reuters reported last week.

The application programming interface, or API, gives companies a direct line of communication with WhatsApp users.

WhatsApp CEO Jan Koum last year said the company would seek to monetize the free chat service by providing businesses with direct access to consumers. He ruled out ads.

WhatsApp last summer announced plans to update its ToS and privacy policy, and said it would be rolling out end-to-end encryption for messages so it could test business chat features.

The company also announced that it would tighten its coordination with parent Facebook.

WhatsApp's decision to coordinate more closely with Facebook triggered a user exodus last year, and implementing a business chat capability could prompt more to flee.

The Monetization Challenge

The approach WhatsApp is taking could have stumbling blocks built in.

"It's always a delicate balance when you mix consumer and business applications," said Alan Lepofsky, a principal analyst at Strategy Analytics.

"On the one hand, it provides value to customers as they can interact with brands in the conversation -- such as communications directly with a restaurant while discussing dinner plans," he told the E-Commerce Times.

"On the other, consumers don't want to be overly pestered by brands, especially if they push ads that aren't relevant," Lepofsky noted.

Implementing a business chat feature "is trying to force-fit into a business purpose a tool that was designed to address a very different problem," said Rob Enderle, principal analyst at the Enderle Group.

"They'd likely be better off starting with a clean slate and using Facebook Messenger," he told the E-Commerce Times.

Messaging App Melee

Competition is keen in the messaging app business.

Although WhatsApp and Facebook Messenger are tied for the No. 1 position in the market, with each claiming 1 billion users, according to Statista, those figures reflect Facebook's global reach.

Q Mobile is not far behind, with 877 million users, Statista's figures show. Nor is What, with 846 million. Skype and Snapchat follow with 300 million users each.

Despite its market position, for businesses WhatsApp "is redundant to existing Web solutions," noted Enderle.

Further, "this class of tool doesn't scale well unless you can automate the experience," he said, "which often defeats the purpose, as people don't like chatting with robots."

Another potential sticking point is whether WhatsApp could provide sufficient user privacy guarantees.

Eighty-nine percent of the 24,000 consumers who participated in a recent Verint study considered the security of personal information vital, and 86 percent indicated they would want to know if their data would be passed on to third parties.

Still, there's hope for WhatsApp's plan to monetize through business chat. Eighty percent of the survey participants said they liked service personalized for their needs.

No Threat to Facebook Ads

Facebook is battling Google for online ad dominance, but the WhatsApp business chat capability may not impact that competition. It's likely that businesses using WhatsApp chat will employ it as an adjunct to their Facebook pages or as an opportunity to contact customers who don't have Facebook access.

"Business pages and WhatsApp chats are different channels for customer interactions," Constellation's Lepofsky noted.

"People continuously go to a brand's page ... and this is about embedding a brand into WhatsApp chats," he pointed out. "A page is more about marketing, whereas a WhatsApp chatbot will be more interactive."

Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology. Email Richard.

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