As WeChat’s user numbers approach WhatsApp, here’s how it makes money from messaging

growth

WeChat – the Chinese messaging app giant – is growing bigger by the day. It now has 438 million monthly active users, which puts it within spitting distance of WhatsApp’s 500 million. That’s a 57 percent improvement from the same time last year, according to the recent earnings report of its parent company Tencent.

Here’s why you should care about WeChat: Aside from the fact that it’s WhatsApp’s biggest competitor, WeChat also provides a glimpse into how American messaging apps can possibly monetize their users. It’s not easy to stick ads in personal messages between people, but WeChat has found creative new money making solutions.

It helped Tencent net $3.2 billion in revenue this quarter in the process, an increase of 37 percent from last year. Some of that money comes directly from the WeChat app itself, which provides “premium features” that customers love buying, like special stickers and emoticons. But the majority of the way WeChat helps bring in revenue is by offering portals to other Tencent properties that are easier to monetize, particularly gaming. It has plugins that allow people to manage their banking through their WeChat app. It’s exploring e-commerce product sales.

Essentially, WeChat monetized messaging by becoming more than just messaging. But it kept that core, simple value and used it to lure people into the app so that they would keep coming back. As AdAge put it, “WeChat blends elements of WhatsApp, Skype, Instagram and Facebook into an all-purpose communication app that has revolutionized cell phone use in China and has been spreading abroad.”

That combination allows for a wide range of ways to make a buck on the app, from customers paying to subscribe to morning “wake up” video messages from celebrities to Tommy Hilfiger “assistants” messaging with WeChat users to help them figure out their best size. Likewise, acquisition deals in the last year suggest that Tencent wants to expand WeChat into a range of other features: Mapping, local reviews, entertainment, retail, and of course, more and more games.

It’s not entirely clear whether a messaging-first-add-more-prongs-later approach is possible with the American social companies that are building their own messaging products. Many of them, like Twitter, Facebook, and Pinterest started with different value propositions – social networks, online scrapbooking – and stuck messaging on top of them. Others – like Instagram and Facebook labs – are experimenting with breakout messaging apps under different branding.

But neither of these approaches lead down the WeChat path. Instagram and Facebook are unlikely to build out a huge platform under its side Bolt and Slingshot endeavors, and Facebook, Twitter, and Pinterest users are too entrenched in these apps’ original purpose to see them as primarily a messaging tool.

Snapchat, on the other hand, does show signs of going the WeChat route. It started with simple ephemeral, image messaging. That brought on users and kept them coming back for more. And now, we’re starting to see Snapchat slowly experimenting with new features.

It introduced “Stories” to try to engage users more, and began experimenting with brand building like the recent Electric Daisy Carnival “Our Story” stunt. The company hasn’t tried true advertising in its product just yet, but there’s a chance it could hit on something new that’s more ad-friendly than its main feed.

Although gaming and banking probably wouldn’t take off with Snapchat, other WeChat-like features could. Celebrities are already using Snapchat to correspond with fans, and brands are offering giveaways and deals through Snaps. The contextual nature of such messaging lends itself to that activity.

Snapchat may not ever be the next WeChat, but it has a better chance of imitating it than its older, entrenched competitors.

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