DO YOU KNOW HOW MUCH POPULAR SOCIAL NETWORKS MAKE AS PROFIT?

1.WHATSAPP


On 26th August 2012 , WhatsApp passed 10bn messages a day (4bn inbound, 6bn outbound – the difference being accounted for by group chats).

None of this is especially scientific, but taken together, it seems pretty clear that WhatsApp has well over 100m active users, and possible 2-300m. Skype, incidentally, has 254m active users.

WhatsApp also has revenue, which Instagram famously did not, though how much is even more opaque. It has no advertising and has said it doesn’t want any.

Rather, revenue, for now, is a one-off fee of $0.99 on iOS and $0.99 a year on other platforms with the first year free. This is pretty unusual. The free entry point on Android makes sense given the poor monetisation rate of that platform, but eschewing recurring revenue on iOS is odd – essentially, WhatsApp will only make money on iOS when it’s growing the user base, at least directly.

To try to get an idea of how much they make, let’s assume that WhatsApp users are spread proportionally across different mobile OS (this is very likely to be far from reality but I can’t find any precise data). The 2011-2012 average of mobile OS is given is the following chart:

Let’s be conservative and consider that WhatsApp has 100m active users who have used it for more than a year. The average revenue split on app stores is 70/30 so in addition to initial revenue from iOS (ca $18m), this gives us around $45m annual revenue through app renewals.

With a staff of just 35, plus outsourced development in Russia, we can assume that WhatsApp operating costs are well below $10m. I have no info on marketing costs but I haven’t seen any ads for WhatsApp, maybe they have some in their target markets.

In any case, it is not unlikely that they have over $20m in after tax profit.


Notes: If we multiply that by 32 (Microsoft agreed to pay for the company is 32 times Skype's operating profits) this gives us a valuation of $640m which isn’t far from the $1bn we are currently hearing about.

In addition, WhatsApp has started doing carrier bundling deals: a small monthly fee for flat-rate access. Terms are not disclosed but the sticker price is low (just $0.30 per user per month for Reliance in India). I’m not entirely sure how sustainable this is as operators move to bundled tariffs (a subject for a future post), but in any case the revenue per user is also pretty small.

2.FACEBOOK

Facebook.com's mastermind, Mark Zuckerberg, owns 24 per cent of shares in the company, revealed a well-placed Silicon Valley source - worth $24 billion, according to a recent valuation

Sources close to Facebook have revealed a sneak peak at the company's finances.
The social network's profits have doubled in one year, and are now likely to be a full billion dollars this year.
That figure is double the reported figure for last year.
The company reportedly made $714 billion profit in the first three quarters of this year, on revenue of $2.5 billion.
It is expected to clear the billion mark in the last quarter.
Mark Zuckerberg reportedly owns 24 per cent of the shares in the company, according to the figures obtained by Gawker.
The Wall Street Journal recently valued the company at $100 billion - putting Zuckerberg's personal stake at $24 billion.
Facebook is expected to raise $10 billion via an IPO later this year, although Zuckerberg himself has been repeatedly reported as being against an early IPO for the company.
The IPO would create roughly 1,000 new millionaires, according to reports - and Facebook employees have said in interviews that they would leave if they became rich.
Other web giants such as Yahoo reportedly faced difficulties from employees sitting checking stock options instead of working in the wake of their IPO.
The company is also - according to a well-placed Silicon Valley source - sitting on $3.5 billion in cash.
That puts it on a par with established web giants such as eBay - and in an ideal position to acquire other companies.

3.WECHAT

• WeChat currently has 549m active monthly users (Source: Statista)
• It has 1.1bn registered users worldwide (Source: Technode)
• 100m of its users are outside of China (Source: The next Web)
• WeChat users are restricted to 5,000 friends (Source: China Internet Watch)
• The app has sparked a range of security risks in many of its markets (Source: The Guardian)
• In ranks second, behind What’sApp among the top social messaging apps (Source: Canalys)
• Chinese Android users spent an average 209min per month on WeChat, compared to 106min on iOS (Source: Tech in Asia)
• 46% of Chinese users have made WeChat their number one app (Source: Technode)
• 80% of Chinese users follow an official account (Source: Technode)
• 90% of its users are between 18-36 years old with a 1.8:1 ratio male to female (Source: Technode)
• $15.3bn in mobile data consumption was driven by Chinese WeChat users in 2013 (Source: Technode)
• WeChat contributes to $1.76bn in lifestyle spending in China (Source: Technode)
• Tencent revenue grew by 24% in Q1 2015 (Source: Bloomberg)
• WeChat is estimated to be worth $100bn (Source: Forbes)
  
  

  4.SNAPCHAT
  
  

  By Jack Delaney, Associate Editor, Money Morning • November 12, 2015
  Mobile app Snapchat is projected to earn $100 million in revenue on an annualized basis, according to Financial Times.
  But one thing isn't clear: How does Snapchat make money? Where does that $100 million come from? After looking at the app, the answer isn't obvious…
  Snapchat makes money several ways, but its newest revenue source, "Sponsored Lenses," was just launched in October. The new lenses feature allows users to take a picture or video of themselves and add different animated filters to the shot.
  These animations can feature different brand logos or branded animations. 20th Century Fox was the first sponsor of lenses, allowing animated selfie features with characters from "The Peanuts Movie." Snapchat users could add animated characters such as Woodstock and Snoopy to their messages.
  According to FT, Snapchat will charge up to $750,000 for a brand to reach Snapchat's entire user base on peak days like Halloween, Thanksgiving, and Black Friday.
  On non-peak days, Snapchat would charge $450,000 to $750,000.
  But that's just the most recent way Snapchat has started earning revenue. Here's the full history of Snapchat and its monetization…
  
  

  5.INSTAGRAM
  

  By Ellen Simon | March 09, 2015
  
  Facebook bought mobile photo-sharing app Instagram for around $1 billion in cash and stock in April 2012. At the time, Instagram was less than two years old and had no revenue. The deal was met with widespread mockery, including a segment on “The Daily Show.” But by December 2014, Citigroup analysts were saying that Instagram was worth $35 billion.
  

  Instagram, Facebook and Advertising

  Instagram makes its money from advertising, just like Facebook. Facebook doesn’t break out Instagram’s financials, but Facebook overall derived about 93% of its fourth-quarter revenue from ads. Ad revenue for the quarter was $3.59 billion, a 53% increase from the same quarter the year before.
  A portion of that revenue almost certainly came from Instagram, which introduced paid advertising on its service in 2013. Since then, its advertisers have included Nike Inc. (NKE), General Electric (GE) and Walt Disney Co. (DIS)

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