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WhatsApp’s engagement drop could be a big red flag

Updated Oct 2nd, 2013 9:26PM EDT
WhatsApp Engagement Analysis

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Even as rival messaging apps such as WeChat, LINE, Kik and Tango have made progress in various markets in Latin America, Africa and Asia, it has seemed that WhatsApp has retained an iron grip on the United States market. It may be below Facebook, Twitter and Vine on the iOS download chart, but it still ranks above Kik, Viber and Facebook Messenger. LINE popped up the U.S. download rankings briefly a while ago, backed by a massive marketing push, but it fell down quickly after the ad spend ended.

Yet something odd has become evident over the past months on the Onavo survey of iPhone engagement levels. The number of iPhone owners using WhatsApp on a monthly basis has now fallen for three straight months, dropping from 9.25% in May to 7.97% in August. What is even odder, the rate of decline seems to be accelerating.

This is in stark contrast with Kik, which has increased its engagement from 4.81% to 5.83% between May and August. Or GroupMe, which has moved from 2.45% to 2.81%. Or Snapchat, which has vaulted from 16.8% to 20.8%. Many of the bigger, established apps have in fact shown stagnant engagement trends in recent months, including veterans like Skype and Twitter. But none of them show a decline as steep as WhatsApp. Even Groupon has remained flat between May and August — big changes in engagement levels are rare, because consumer app habits tend to be relatively stable.

Is it possible that WhatsApp is being nibbled to death by a hundred ducks, its engagement level dropping as particularly younger consumers migrate to new, fresh services like Kik and Snapchat? The download performance of WhatsApp has deteriorated steeply since the early summer. Before mid-July, the app was routinely in the top 3 of all free iPhone downloads in America.

But over the past two months, WhatsApp has abruptly and surprisingly started swinging between No. 20 and No. 40 in the US download chart. This may be linked to the algorithm changes implemented by Apple since the App Store rankings now favor free apps that generate revenue from in-app purchases in a certain manner. Could it be possible that the WhatsApp drop in the App Store rankings is linked to the decline of its monthly user base that Onavo is detecting?

This is still early days for a new trend, but it is definitely starting to look as though the American messaging app market may be more fluid and open to change than had been anticipated. Facebook may have been able to squash its smaller rivals in the social network space, claiming an effective monopoly in its niche in the American market. But that winner-take-all dynamic does not seem to be repeating in the messaging app segment.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.