Posted by Mary Ann Kelly
Everyone in our industry is buzzing about Facebook’s acquisition of WhatApp for $19 billion. Not just the reasons why Zuckerberg was interested in the company US investors have heard little about, but why he paid such a staggeringly high price for it.
Here’s what we found, but first…
What the heck is WhatsApp?
Don’t worry. You’re not alone. WhatsApp is much better known outside the US. Fact is, it has 450 million users globally, which is more than Pandora, Twitter or LinkedIn. Crazy, right?
WhatApp is a texting platform that allows users to send pictures, web site links, locations, voice recordings and other frilly stuff. It’s the cooler and more playful cousin of your generic texting platform. Users send 500 million pictures back and forth every day – that’s about 150 million more than Facebook. Plus, they’ll be rolling out voice calling feature in the spring.
WhatApp’s founder is an ultimate Frisbee playing, Ukrainian immigrant, college dropout and former Yahoo engineer that was collecting food stamps before WhatApp hit it big. Great bio on Jan Koum, here.
Why did Facebook have to have them?
One of the leading hypotheses is that Facebook needs to expand on the mobile platform. They tried previously to purchase Snapchat for $3 billion.
Zuckerberg said WhatsApp is “a great fit for us. Already almost half-a-billion people love using it for messaging and it’s the most engaging app we’ve ever seen exist on mobile so far.”
OK, what else?
We liked this explanation from Jared Newman at Time:
- Facebook is becoming a social media conglomerate. Kara Swisher at Re/Code paints Facebook as a Disney-like media giant. It may not be able to own every popular service, but it can become the dominant player with different tools like Instagram and WhatsApp in its arsenal. Each one does things that the other property can’t.
- Facebook needs to expand its Europe and emerging markets presence. As TechCrunch’s Josh Constine notes, WhatsApp is huge in developing countries. Facebook could also use WhatsApp to help bring more people online through subsidized Internet, which Facebook already offers in some countries. The acquisition is a shortcut to owning those growing markets.
- Facebook must buy its way into “ephemeral” and/or “dark social” communications. Just think about all the stuff you talk about, the photos you send and the links you share when you’re communicating privately — if not through WhatsApp then through something else like e-mail — instead of broadcasting to your Timeline. All that data is invisible to Facebook, unless you use Facebook Messenger. (And if Messenger was hugely popular, Facebook wouldn’t need WhatsApp.) WhatsApp can provide troves of data about the things we’re really interested in, which can then be used for targeted advertising on other Facebook properties. Alexis Madrigal’s 2012 post on Dark Social helps put this idea in context.
What are the implications & opportunities for marketers?
We’re not sure yet and would love to hear from YOU social media and mobile prophets! At the moment, plans are for WhatsApp to continue to operate as an independent and ad-free property.
What do you think Facebook has in store for us next? How will their photo-sharing and texting acquisitions play out?
