How much money can Meta make from WhatsApp ads? This analyst does the math.

Meta is expanding monetization efforts on WhatsApp through new business features like subscriptions, promoted channels, and status advertisements, potentially generating over $10 billion in annual ad revenue by 2028. According to Evercore ISI analyst Mark Mahaney, if Meta achieves just $6 in average ad revenue per daily user and increases Updates tab usage to 1.7 billion, the new features could significantly boost Meta's operating income, leveraging Meta's track record of successfully monetizing new platforms.

Analysis

Meta Platforms Inc. is strategically advancing monetization for its WhatsApp service, introducing advertising features and business options such as channel subscriptions, promoted channels, and status carousel ads. This initiative targets WhatsApp's 1.5 billion daily users of its Updates service, a significant expansion from the 450 million monthly users at its $19 billion acquisition in 2014. Evercore ISI analyst Mark Mahaney projects these new features could generate over $10 billion in annual ad revenue by 2028, based on a conservative $6 average advertising revenue per daily user and an expansion of the Updates tab's daily user base to 1.7 billion. This could translate to an additional $5 billion in operating income. Meta has assured users that these changes will be confined to the Updates tab, aiming to preserve the core messaging experience. The company's established success in monetizing platforms like Instagram lends credibility to its potential with WhatsApp, despite the latter's historically slower monetization pace due to its primary utility as a messaging app.

Key Decisions for Investors

• Investors should closely monitor the adoption rate of WhatsApp's new business features and the realized average revenue per user (ARPU) as critical metrics for gauging the success of this monetization strategy.
• Consider the potential for substantial revenue and operating income accretion from WhatsApp, particularly given Meta's proven track record in scaling monetization on its other platforms.
• Assess Meta's ability to integrate these new commercial features without negatively impacting WhatsApp's user engagement or core chat experience, as this will be crucial for sustained growth.