how would you monetize WhatsApp these product strategy questions are tough that's why you have me so today in this video I'm going to cover three things we're going to talk about the framework that you can use to tackle this question two monetization models that you should know and three let's think of some monetization features for WhatsApp so let's kick off with a framework so I have a four part framework for you to tackle this question and as with most questions it starts off with let's understand the product so what is WhatsApp at the most basic
level WhatsApp is a messaging app that allows people to communicate with one another how does it work you might ask well once you've downloaded the app you would then add your friends phone numbers then you can send messages to them and you can even create group messages for a group of your friends and some other features include you can call your friends you can send them photos you can send them voice messages which is one of my favorite features and we're seeing a growing number of use cases on the platform like even today people like
myself reach out to businesses on WhatsApp to communicate with them but messaging apps traditionally are pretty tricky to monetize I mean WhatsApp initially started monetization by charging people on the App Store was it like 99 Cents 199 in order to download the app and I remember even at that time it was Bonkers to think that a messaging app would charge users and I definitely being in the us where we have iMessage was like I'm not paying for this so that's one reason why it's so hard to monetize messaging products because it's pretty commoditized and hence
people are not used to paying for messaging apps the other reason it's hard is because messaging is a quite intimate setting so it's a bit harder to then put commercial activity like ads in your messages so that's what makes this question especially hard but again you have me so we're gonna tackle This Together step number two in this framework is who are the users and what do they need so when we think about WhatsApp that you have the consumers so people like myself like yourself who are using the product to mainly communicate with their friends
and family a second set of users are businesses on the platform so businesses what do they want to need they also want to use WhatsApp as a channel to communicate with their customers but they also want to use it as a channel to come up with lead generation to get more sales to allow people to maybe even Buy on their WhatsApp platform rather than having to go outside of the app step three I'm going to cover some monetization models and here I cover them pretty exhaustively but when you're answering this question you want to cover
a subset that you think is the best fit for the product at tan so let's cover the six most common monetization models for businesses model number one is probably the most used monetization model and it's basically a subscription model so most likely you're paying a subscription for something anywhere from products like Netflix or Amazon Prime to your phone bill that's a subscription and nowadays you have subscriptions for everything there's one Subscription Service I saw called the cat lady box so for you cat lovers every month they will send you a box of things for your
cats the second model is the freemium model and this model is free access to the app and certain features and it gives you a basic version and then you would upgrade if you wanted more features so a good example of this is Spotify so you know the free version comes with ads but the paid version comes without ads but also allows you to for example use Spotify in a different country allows you to download music allows you to choose songs on mobile so they've done a good job of getting people to upgrade to the more
advanced version because they've made it pretty annoying to stay on the basic version the third model is the as model which you're probably intimately familiar with because they are everywhere ads has largely powered our media ecosystem so nowadays you see ads on things like Google and Facebook but even before that ads had powered our consumption of TV examples of ads are sponsored listing or even affiliate marketing and they are especially good for entertainment or media sites that have a ton of traffic for example the Google Facebooks of the world or forbes.com which is getting a
bit annoying in terms of the ads like I can't even see them content anymore at this point or even the Spotify radio like ads model number four is transaction fees and this is the fee a business would charge their customer when they make a transaction on the platform so think of Airbnb they will charge the host and the customer a fee to use the platform or services like doordash again they charge the restaurant a percentage but they also charge you as a customer for using the platform model number five is selling physical Goods digital Goods
or a service so nowadays for YouTube you can actually buy stickers to send to your creators or there's the model of giving free information but monetizing through getting Consulting gigs through it and model number six is the licensing model so this traditionally a ton of Enterprises like the Oracles of the world or sales forces of the world we're using this model and it's kind of similar to the subscription model except you would pay for a license for the number of users in the your organization that are using it and you would pay a pretty large
amount rather than a monthly subscription model and this is not an exhaustive list there could be other monetization models and I'm curious what are other models that you've seen using products and you might realize as I talk to these models a lot of businesses tend to mix and match a couple of these different models to ensure they get multiple revenue streams for example Spotify they use both ads and a subscription model so that they're monetizing both the free users and the paid users and a lot of platforms have followed suit like YouTube they created their
YouTube red or YouTube TV whatever they call it nowadays to get people who want ads out of their content so from this list of different monetization models you've prioritize a couple that aligns with the user's needs business goals and step number four is to come up with the actual Solutions so here we're gonna have some fun and think about ways to monetize WhatsApp so I have four solutions for you the first is utilizing transaction fees so business today on WhatsApp Beyond just communicating with customers they at the end of the communication want people to buy
stuff and pay for their services or Goods one solution could be building out these stores on WhatsApp itself that it allows customers to complete a sale on the platform and then from that WhatsApp could charge the business for the sale happening and if it wanted to even the customer you might first start off with charging the business rather than the customer because you want to entice customers to create a behavior and a habit of buying on WhatsApp and the businesses are willing to spend more early on to be listed on the platform so what is
an experience like this sound like let's say I wanted to get a facial and I decided to communicate with the business through WhatsApp an ideal experience would be at the end after they answer the question I have of whether they do micro needling which for those that don't know it's poking small holes into your face the post to make it better anyways check it out on YouTube is once my messaging once I get the answer that I need from the business I'd want to book an appointment and pay for it right there and then so
let's say let's give the business a way to allow customers to book directly on WhatsApp a pro tip for you here you might be wondering how do I come up with Solutions of ways to monetize inspiration is everywhere whatever product you're using there most likely is a monetization model and hence look taking a critical lens on what monetization model they're using it and how effective it is products that I think do really well in Inspiration is check out some of the Chinese products like WeChat they've come up with different ways to monetize a second solution
is utilizing the monetization model of selling physical digital goods or services so when I think about messaging Beyond just text people want fun ways to message for example I'm obsessed with gifts if you haven't noticed all my videos have gifts and I would pay someone on whatever messaging platform I'm using to create maybe custom gifts or gifts that I find funny so here WhatsApp might be able to monetize by getting creators to build sticker packs or gift packs or meme packs and sell it on the platform and this already exists on products like WeChat so
what would the experience look like let's say I want special stickers that stand out it holiday season my favorite holiday is Halloween and let's say I wanted to buy a sticker pack that was very Halloween themed and here I would go into the sticker store and purchase a sticker pack from a crater for let's say two dollars or five dollars and a Creator then gets a percentage of the money and WhatsApp gets a percentage of that money model number three is using the freemium model so here WhatsApp could create basically the free version of their
app as it is today but they could also create a more advanced version so for example when you create a group chat you have a limitation of how many people can be in that group so let's say maybe they create Advanced version where that limit doesn't exist or the limit is higher to a thousand people instead of I think what is it 512 people or getting people who really care about privacy to pay for end-to-end encryption the end-to-end encryption might not be a great one because a lot of services now offer that for free so
people might just hop onto those products but you'd use some creativity to think what are competitor products that might not have something that you could build at the intersection of what are product features that people have really been asking for so what does the experience look like for this well let's say I created a group for a party that was more than 512 people which I think is the current limit and at that limit it would show a little pop-up if you want to add more people upgrade to the WhatsApp pro version and idea number
four is again using the transaction fees and here it's allowing users to buy gifts for friends and family and then what's that taking a transaction off of that so now that I think about it it's not that different from the first idea where businesses get people to buy stuff and a part of that sale goes to Whatsapp but I like this idea because it's fun and basically imagine people wanting to buy gifts for their friends so that's the experience let's say my friend Janet I wanted to buy her a coffee because she's not feeling well
so I can buy let's say a Starbucks coffee for her directly on WhatsApp she could go over demon in stores this one is a fun idea that I heard exist in Korea already so again a lot of these ideas are not new they are inspiration from how other apps have monetized and I think that's perfectly okay I mean think about the ads model that has evolved from being used in newspapers then to TV then to the digital era of social media what's important about designing monetization models though is the design and experience that won't isolate
your users so head tread carefully and how would you decide which one to build well similar to the product sense question you would figure out what does it cost to build this and what is a potential Revenue opportunity and here's again the four-part framework and tackling the question how would you monetize WhatsApp and this can be asked for any question asking you how would you monetize this product and this is an example of a product tragedy questions which tend to be harder another great question they asked during product interviews is how would you decide if
let's say Amazon should enter the smartphone market and this is quite tough so check out this video where I show you the framework to answer these type of questions and I will see you guys in the next video
