Product Strategy Interviews: Monetization

Summary

This video discusses how to approach the question of monetizing WhatsApp, offering a four-part framework. First, it emphasizes understanding WhatsApp as a messaging app and its different user groups (consumers and businesses). Next, it explores six common monetization models such as subscriptions, freemium, and transaction fees. Finally, the video provides creative solutions to monetize WhatsApp, including transaction-based business features, selling digital goods, and premium services. It encourages drawing inspiration from other apps like WeChat while ensuring monetization strategies are user-friendly and aligned with business goals.

Takeaways

• 😀 WhatsApp is a messaging app primarily for communication, but businesses are increasingly using it to reach customers.
• 💼 Monetizing messaging apps is challenging due to user expectations of free services and the intimate nature of messaging.
• 💸 The first monetization model suggested is a **subscription model**, similar to Netflix or Amazon Prime.
• 🎧 The second model is the **freemium model**, where the basic version is free, and premium features can be unlocked for a fee.
• 📺 The third model is **ads**, commonly used in platforms like Google, Facebook, and Spotify.
• 📦 The fourth model involves **transaction fees**, where businesses and users are charged a fee for transactions made on the platform.
• 🛍️ Another monetization idea is selling **physical or digital goods** on WhatsApp, such as stickers, GIFs, or digital packs.
• 🚀 WhatsApp could offer a **freemium tier** with advanced features, such as larger group limits or privacy-focused services.
• 🎁 There’s also potential for users to buy **gifts** for friends or family directly through WhatsApp, with a transaction fee applied.
• 🔄 Many platforms, like Spotify and YouTube, use **multiple monetization models** (ads and subscriptions) to maximize revenue.

Q & A

What is the first step in the framework for tackling monetization questions?

The first step is to understand the product itself. In the case of WhatsApp, it's a messaging app that allows people to communicate via text, voice messages, photos, and calls.

Why is it difficult to monetize messaging apps like WhatsApp?

Monetizing messaging apps is challenging because messaging is commoditized, with many free alternatives available, and users are not accustomed to paying for such services. Additionally, messaging is an intimate experience, making it difficult to introduce commercial activities like ads without disrupting user experience.

Who are the two main user groups of WhatsApp identified in the video?

The two main user groups are consumers, who use WhatsApp to communicate with friends and family, and businesses, who use it to communicate with customers, generate leads, and potentially complete transactions.

What are the six common monetization models mentioned in the video?

The six common monetization models are: 1) Subscription model, 2) Freemium model, 3) Ads model, 4) Transaction fees, 5) Selling physical or digital goods or services, and 6) Licensing model.

What is the 'freemium' model, and how could it apply to WhatsApp?

The freemium model provides basic services for free while charging for advanced features. For WhatsApp, this could involve keeping the basic version free but charging for additional features like larger group chats or exclusive stickers.

How could transaction fees be used as a monetization strategy for WhatsApp?

Transaction fees could be charged when businesses complete sales through WhatsApp, such as allowing customers to book appointments or purchase goods directly on the platform. WhatsApp could charge the business a fee for these transactions.

What is one creative way WhatsApp could sell digital goods?

WhatsApp could monetize through the sale of custom digital goods like sticker packs, GIFs, or meme packs created by content creators. WhatsApp would take a percentage of the sales from these goods.

How can the ads model be challenging for WhatsApp specifically?

The ads model can be challenging for WhatsApp because inserting ads into personal messaging can feel intrusive and damage the user experience, which is typically private and intimate.

Why might businesses be willing to pay more for WhatsApp’s transaction services initially?

Businesses may be willing to pay more initially to get customers used to making purchases directly on WhatsApp, creating a new habit for users. Early investment could also make the business more visible on the platform.

What inspiration can WhatsApp draw from other apps, particularly Chinese apps like WeChat?

WhatsApp could look at how apps like WeChat monetize through multiple models, including selling digital goods, charging transaction fees, and integrating commerce seamlessly into the messaging experience.