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Facebook (FB) Prepares to Roll Out Ads on WhatsApp Status

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Reportedly, Facebook (FB - Free Report) owned WhatsApp will soon allow advertisers to display ads in its Status section. Per NDTV, the ads are expected to be rolled out from next year.

Originally inspired by Snap’s (SNAP - Free Report) Snapchat Stories, Status was introduced in February 2017. The feature allows users to display text, photos, videos and Graphics Interchange Format (GIFs) on a separate tab in the WhatsApp application.

Notably, ads will be visible on WhatsApp Android beta version 2.12.305.

Can Status Bring Success to Facebook?

Facebook is clearly looking to monetize its platforms. The company detailed its efforts to generate revenues from platforms like WhatsApp and Messenger in the last reported quarter.

Notably, WhatsApp currently boasts a user base of over 1.3 billion. Additionally, as confirmed at Facebook’s F8 developer conference this May, WhatsApp Status has 450 million daily active users (DAUs) globally.

The social media giant intends to bring ads to WhatsApp Status to familiarize its users with the current businesses on WhatsApp. To start with, Facebook is expected to roll out ads to the 35% of WhatsApp users who are active on Status.

Additionally, through these ads, business owners can get deeper insights into the needs and preferences of customers. Businesses can gather customer data as Facebook allows users to know which contacts have viewed their Status.

We believe this feature will attract more and more advertisers to the platform, thereby bringing in ad dollars, which contribute significantly to the top line (98.5% of total revenues in last reported quarter).

Notably, the company is bringing ads to WhatsApp Status after its success on Instagram Stories. On the last conference call, management noted that Instagram Stories has 400 million DAUs.

Facebook, Inc. Revenue (TTM)

Facebook, Inc. Revenue (TTM) | Facebook, Inc. Quote

Monetization of WhatsApp Business to Boost Revenues

Facebook is also looking to monetize its WhatsApp Business app.

In early August, Facebook announced WhatsApp Business application program interface (API), which is expected to generate revenue for the company, per TechCrunch. The interface will enable WhatsApp users to directly contact businesses for any queries.

Responses in the first 24 hours are free of charge, following which Facebook may charge between “half a penny and 9 cents depending on the country”, per Wall Street.

Reportedly, 100 business partners including Uber and Singapore Airlines are testing the feature. Netflix (NFLX - Free Report) particularly in India was also spotted testing the feature, per TechCrunch.

Notably, WhatsApp Business has a user base of more than 3 million, per NDTV.

Facebook’s efforts to use its existing platform to generate additional ad dollars bode well.

However, the company’s repeated failures to secure its main platform are increasing investor concerns. If Facebook fails to curb malpractices on its platform, the company is likely to see growth in user base, which does not bode well.

Facebook currently carries a Zacks Rank #4 (Sell).

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A better-ranked stock in the broader computer technology sector is Angie's List (ANGI - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank Stocks here.

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