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WhatsApp and Instagram shift business models, FT

The image-sharing site is turning its attention to small business owners to bolster its advertising offering



Jan Koum, co-founder and chief executive of the messaging app acquired by Facebook for $22 billion in 2014, told the DLD technology conference in Munich that WhatsApp is scrapping the 99-cent annual fee it charges consumers after a year. He said the company would instead focus on making businesses pay to connect with its 900 million users.

In a blogpost, the company said it will test tools to allow users to communicate with organisations on the platform. “That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight, ” it said, adding that it wanted to find a way of doing this in a way that did not rely on advertising.

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Thomas Husson, analyst at Forrester Research, told Financial Times said that WhatsApp was following in the footsteps of China’s WeChat. The service, owned by internet group Tencent, offers much more than just messaging, including the ability to access entertainment content, order a taxi and pay for goods directly from the platform.




Sales integration between Facebook and Instagram is increasing as the latter looks to build upon its advertising business, according to Instagram’s chief operating officer Marne Levine.

The image-sharing platform is leveraging Facebook’s resources in a bid to woo small businesses as part of its global expansion strategy, the Financial Times has claimed.

Facebook acquired the photography app three years ago for $1 billion with a view to running the business as an independent group.

Speaking at the DLD technology conference in Munich Monday, Levine said Instagram has been relying more heavily on its parent company’s sales team.

“When we launched ads two years ago, ads were available in just eight countries. In September, we opened for business in around 200 countries… What you’ve mostly seen so far is bigger brands and bigger businesses using advertising to connect with consumers, ” she said.

“I think what you’ll see in 2016 is small businesses starting to advertise more and take advantage of this platform.”

Pointing to the fact that two thirds of the app’s 400 million users are based outwith the US, she said that global domination would be key in the coming year and that Facebook’s commercial arm would play a pivotal role in helping Instagram hone in on small businesses.

“We can plug in to the infrastructure and really leverage a lot of the resources that Facebook has, ” she added.

In 2015, Instagram scaled up its advertising business to implement a “seamless backend” so marketers could use it in tandem with Facebook.

On top of allowing brands to display several images at once and use clickable links it also introduced a new ad format, Marquee, which gives marketers the ability to target a massive audience in a short time frame via a series of images or videos.

However, Levine was quick to quash rumours that the site intends to implement a ‘Buy’ button similar to the one Facebook has been toying with.

Research conducted last year noted that marketers are rapidly embracing Instagram, with the use of the platform forecasted to double in 2016.

Source: The Financial Times



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