Chatter: What’s behind Facebook’s purchase of WhatsApp?

February 20, 2014  |  Alicia Androich  |  Comments

On Wednesday, Facebook founder Mark Zuckerberg announced via Facebook (go figure) that his company will be acquiring WhatsApp, an instant messaging app.

Facebook has seen a drop in its global share of active teen users recently, so the purchase makes sense from the perspective of appealing to younger users.

What else does the $19-billion deal – a staggering amount compared to the $1 billion Facebook shelled out to purchase Instagram in 2012 – mean for Facebook?

Here’s the chatter on this yet-to-be-approved deal.

Josh Constine and Kim-Mai Cutler @ TechCrunch
Constine and Cutler figure WhatsApp “was just too far ahead in the international mobile messaging race for Facebook to catch up,” with a million users signing up to the app daily and 450 million monthly users. WhatsApp’s mobile messaging app dominates in markets such as Europe and India, and is easy and fast for users, they wrote.

In the last year, it seems that WhatsApp found much more success with mobile messaging in developing markets than Facebook. The writers said they’ve heard Facebook has been looking at buying WhatsApp for a couple of years. “You might wonder how WhatsApp will ever earn back the money it cost to buy, but this acquisition wasn’t about increasing Facebook’s total revenue. It was about surviving the global shift to mobile.”

Prantik Mazumdar @ Campaign Asia-Pacific
While Zuckerberg said for the near future WhatsApp will run independent of Facebook, Mazumdar theorizes how brands could leverage WhatsApp if the two services do integrate. If Fan Pages incorporated WhatsApp or allowed WhatsApp to open brand channels (as Instragram allows brand pages), Mazumdar writes “it would open a whole new, personalized communication channel for brands to reach out to fans on their mobile devices, market their brand offerings, promos and even use it as a channel for customer service.”

While WhatsApp doesn’t have ads now, if that changes there would be lots of opportunities for brands, wrote Mazumdar. Using the revenue models of WeChat and Viber for comparison’s sake, he said brands would be able to run targeted ads to interact with WhatsApp users, allowing them to create personalized, location-based ads for target audiences.

The creative teams at brands should be ready to create content quickly in new formats since, theoretically, brands “would be able to create customized brand content through stickers, doodles, emojis, etc.”

There could also be a chance for Facebook to “offer m-commerce opportunities for brands to directly sell to customers via WhatsApp. Brands could sell independently as they do on Twitter or they could tie up with telcos to piggyback on their delivery and billing services.”

Marketers may also get giddy about the potential for brands to “access and harness the data analytics that WhatsApp would be able to provide – the juxtaposition of data about mobile app usage, contact data, location data, peer-to-peer interaction could be very lucrative to mine,” wrote Mazumdar.

Charlotte Henry @ The Wall
As other media watchers noted, The Wall pointed out that Facebook’s own instant messaging service has improved on mobile, but isn’t as good on a phone as WhatsApp. “No doubt you will soon be able to sign into WhatsApp using your Facebook login too, giving users another reason to keep their Facebook account,” wrote Henry.

And while WhatsApp co-founder Jan Koum has said that its service won’t change for users, media watchers are wondering how it will make money. Will ads be coming to the service? “I’d be amazed if Facebook’s social graph capability was not used to bring targeted ads to WhatsApp,” wrote Henry. “It’s always been mobile that Facebook have found hardest to [monetize], and this purchase can only be part of the strategy for correcting that.”

Gavin O’Malley @ MediaPost
O’Malley contacted Gary Vaynerchuk (whose agency does social media for brands including General Electric and PepsiCo) to get his take on the deal and what it means for agencies. The answer: very little for the time being. “Facebook is too smart to let brands jump into this world,” said Vaynerchuk. “[Facebook are going to] allow it to stand along and thrive for the next year or two at least… after that, it becomes more of a conversation.” Vaynerchuk believes the purchase “is more of a communication infrastructure platy that a media or user play.”

David Rowan @ Wired
It’s funny how quickly things (or, in this case, views on being acquired) can change. Wired editor David Rowan spent three days with WhatsApp’s co-founders in December, and some of their comments show how fast things can change when Facebook comes knocking and looking to buy.

Koum and fellow founder Brian Acton met while working at Yahoo; they both left the company in 2007. Ironically, Koum stated to Rowan that “We worked in a large company and we weren’t that happy.” Acton added at the time “I worry about what [an acquiring] company would do with our population: we’ve made such an important promise to our users – no ads, no gimmicks, no games – that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity.”

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