Facebook announces acquisition of
WhatsApp in a deal worth a total of $19bn (£11.4bn) in cash and
When the news broke of
Facebook's latest acquisition the news channels lit up, some
questioning the price tag while others could see the opportunity of
WhatsApp, the personal real-time messaging
network, allows millions of people around the world to stay
connected with their friends and family. With 450 million current
users and 1 million more signing up every day, it's certainly in
line with Facebook's vision of making the world more open and
To guide you through this
deal and the potential ramifications of it, we've pulled together
three perspectives from the different areas of the MediaCom
business to share with you.
Managing Partner and Head of
What is WhatsApp?
WhatsApp is the Instant messaging
service that is in the process of destroying MMS & SMS
businesses for the mobile companies.
There are 450 million users worldwide,
500 million images are shared daily (there are only 350 million
shared on Facebook and 55 million on Instagram). The business model
is - no ads and no games - with users getting the first year free
and then paying $1 a year thereafter - given it only has 32
engineers and less customer service people, this is a smart, low
cost, high volume business.
The investment looks toppy as a
proportion of Facebook's market cap (YouTube cost Google 1.3% of
market cap, this is 9% of Facebook cap) BUT that doesn't make it a
bad move, as suggested below, it's a hefty bet is all.
Having bought Instagram for a $1bn and
now this Zuck is making two bets here really, both coming from the
same place - Facebook's mission & vision
"Facebook's mission is to give people
the power to share and make the world more open and connected."
"People use Facebook to stay connected
with friends and family, to discover what's going on in the world,
and to share and express what matters to them."
(The latter is a quote from the IPO period that surfaced on Zuck's
Given the above, the acquisition makes
a lot of sense: WhatsApp is freeing up people to share and connect
on a cost basis 100 times lower than the data impact of using SMS
& MMS; many people (from Cisco to Microsoft and beyond) have
predicted the rise of the visual web - this is part of Facebook's
ongoing bet that this is nearer than we think and that sharing and
connection will move beyond words.
Arguably both these acquisitions are
"recruitment" bets as well. Instagram and WhatsApp's core user base
is younger than what Facebook's is now. And Zuck doesn't need to
recruit these guys into Facebook, but does need them in part of the
So, the acquisition is totally in line
with Facebook's long term business vision, even if it won't be an
Ben Phillips MediaCom's
Global Head of Mobile
The beautiful realisation should be
that the consumer is now shaping and defining the use of mobile
technology, faster than the developers and creators could have
Build it and they will come... if
you're in the right place, at the right time with the right
audience, on the right device!
Initially adopted by those furiously
texting one another while avoiding carrier SMS charges the onset of
"eat all u like" data bundles flamed the fire and justification of
using an app rather than defaulting to Old Skool SMS and all is
With the acquisition, apparently
curated over 11 days, Facebook demonstrates its ability to future
proof its communication tool set. WhatsApp resonates well as a
simple concept adopted by millions, quickly.
The statement to not place advertising
across the application is the right message, for this audience,
lest we forget the value of the data collected from any application
we install. This data goes a long way to providing the core to
delivering relevant marketing messages personalised to individual
preference. With data sources coming from multiple applications and
platforms you can afford to sacrifice one at a later date to become
the display centre if your ad network.
Advertising will change as a result
with a shift from mobile banners towards more contextual, rich
media, unique ad units. Actively choosing to share our personal
information via mobile opens up the opportunity for brands to be
extremely targeted and granular in their advertising.
So Facebook, Instagram and now
WhatsApp, what next? We can only guess but it's the consumer that
has the power to show us what they want, we need to be ready to
listen, and too respond. Quickly!
Andy Way, Head of Social at MediaCom Beyond Advertising
The really interesting thing about
this acquisition is not really the price vs. potential revenue,
which is getting all the headlines, but the fundamental nature of
WhatsApp - its simplicity.
WhatsApp is purely a messaging service
which stakes it reputation on its minimalist design and technology.
This is one of the things that makes it popular with users: it does
one thing extremely well and doesn't clutter the service with
additional features or advertising. Many of its competitors (Line,
Kik, etc) are full-on mobile platforms that allow third-party
developers to build on them: games, payment solutions, etc. This is
something that WhatsApp does not do, currently anyway…
Zuckerberg's statement that Facebook
will allow WhatsApp to remain ad-free is important. What could be
more important is whether he also intends to leave it as a pure
messaging app or whether the technology will be opened up to make
it a true mobile platform.
The deal also confirmsFacebook as
becoming, essentially, a mobile business which offers a suite of
apps - often with functionality that crosses over with one another.
WhatsApp may not have huge North American reach (although I bet
there will be a lot of new sign ups there today!), but it does give
Facebook a load of new users in emerging markets."