ADOTAS — Yesterday, Facebook announced it will acquire mobile messaging platform WhatsApp for $19 billion in cash and stock. Today we asked our esteemed panel of industry leaders and experts what the deal means for Facebook and the mobile ad industry as a whole. Here’s how they responded:
“There are several key benefits that Facebook will see from the WhatsApp acquisition: additional demographic appeal, global expansion, and deeper data connections. As the younger generations move away from Facebook that has become popular with their parents and even grandparents, they are moving to apps like SnapChat and WhatsApp to communicate privately with their friends. This acquisition will allow Facebook the diversity in their portfolio to ensure they will have a touch point with this younger audience in the future. Facebook is currently blocked in China; however, WhatsApp is allowed for download there. This will open the door for Facebook to open the conversation for countries, like China, where they are currently blocked. This acquisition could likely be part of a much larger tiered approach for future global expansion. And finally, mobile acquisitions for Facebook continue to offer opportunities for deeper data connections. Facebook already has significant data on its user base, but users are currently identified by email addresses only. WhatsApp connects information directly to a person’s phone numbers, which is essentially becoming an ID number in today’s digital age. By connecting the social groups and contacts from WhatsApp with the data already available through Facebook, they will be able to have a deeper understanding that will allow for more effective networking and advertising recommendations.” — Marc Landsberg, Founder, CEO of SocialDeviant.
“This is a brilliant move on Facebook’s part as they are now ensuring that they grab the millienials attention. By owning Facbeook, Instragram and now Whatsapp, they own web, mobile, pictures and now texting. This helps ensure that they’re not declining in the 18-24 year old market. In fact, this should increase their stronghold on the younger generation and allow them to market more effectively to all users.” — AJ Vernet, CEO and Founder of Republic Project, a Sizmek Company.
“The overall growth in social messaging, in-app messaging, push notifications, etc. is occurring faster than SMS because social messaging lives in our social communities – the messaging functionality is richer and more personal than SMS. SMS costs money – wireless companies don’t get it. They want to squeeze every last dollar out of their user while more innovative companies are offering the service for free. If SMS wants to succeed, it will need to adapt to the way people communicate – in groups, with photos and with no friction. Mobile carriers are not likely to get rid of SMS anytime soon. However, data and cell plans may begin to reflect usage of apps like WhatsApp. ‘Carriers’ as we know them are communication platforms, as are Facebook, Instagram and WhatsApp – if carriers don’t evolve their communication methods to keep up, they won’t be carriers much longer.” — Chris Cunningham, CEO of Appssavvy.
“Social messaging platforms are an important growth area in mobile apps as highlight in our 2013 global retrospective, with many players listed in the worldwide top ten rankings. The acquisition of WhatsApp highlights their importance, as does the fact that the other players, Kakao, Kik, Line, Tango and Tencent, have all created platforms with large installed bases and successful monetization strategies. Given the potential growth and active usage, Facebook is acquiring more than technology, it now has a foothold into the social messaging arena.” — Bertrand Schmitt, CEO, App Annie.
“Social networking sites, especially Facebook, have been after the phone numbers of their users for a while. In fact, Facebook recently asked its users to provide their phone numbers for better security etc. With this acquisition, Facebook will have access to the phone numbers of WhatsApp users. Since many people use both WhatsApp and Facebook apps on their smartphone, it wouldn’t be too difficult for Facebook to connect the Facebook profiles of their users to the phone numbers that they use for WhatsApp on the same device. I believe this could give Facebook even more power in terms of their targeting and advertising efforts. It could become even more attractive for companies to reach to users via both Facebook and phones. On the other hand, it is not totally surprising that some consumers already complain about possible privacy issues and Facebook becoming too big of a player in social media. I think Facebook may need to do some explanation about their motives for acquiring WhatsApp, at least to address those consumers’ concerns.” — Sertan Kabadayi, associate professor of marketing at Fordham University’s Schools of Business and Acting Area Chair for marketing.
“It’s clear to me more than ever that Facebook has evolved into a utility – albeit a massive one — and this acquisition is a way to add easy and valuable mobile functionality at scale. If I were a carrier I’d be re-thinking the rate structure for my texting services (which cost me nothing). As far as the rest of the mobile ecosystem goes, huge fertile ground for everyone remains.” — Lon Otremba, CEO of Bidtellect.
“For Facebook it means they’re another step closer to uniting people’s communications under one umbrella. For mobile marketing, according to all the reporting out there, their immediate goal is user growth, not monetizing with ads. They know that users won’t accept ads in their text messages.” — Ben Williams, PR Director, Adblock Plus.
“Facebook is very clearly the dominant social network, and they will do whatever needs to be done to maintain that presence. Their most recent demonstration of this, is their recent acquisition of WhatsApp for 19 billion dollars. Currently, WhatsApp does not have any sort of advertising on its platform and only costs its users $1 to use. Zuckerberg made it clear that advertising is not his primary focus with WhatsApp. He does not plan on immediately testing ads, like was done with Instagram. Instead, the goal is to grow WhatsApp and once it becomes more widely used, Zuckerberg and Team will possibly shift their focus to monetizing the platform. Until then, the goal is to continue to increase the connectivity of the world. In the future, it is likely that Facebook will find a way to make make a profit off of WhatsApp, but it is unlikely to be through traditional advertising. As Zuckerberg said, ‘I don’t personally think ads are the right way to monetize messaging’.” — Molly McCarty, Social Account Manager at 3Q Digital.
“Facebook’s somewhat expensive investment in Whatsapp is a hedge against inevitable desktop user erosion and a clear recognition that P2P messaging — like email — is the true killer app for mobile and their best shot at mobile monetization.” — Dave Hendricks, president of LiveIntent.
“Nineteen billion is an incredibly large number, but WhatsApp has achieved a scale and rate of growth in active users never seen by an over-the-top messaging app before. The success of WhatsApp, aside from the sale to Facebook, really underscores the incredible value of messaging and that text messaging is the preferred method of communication on a mobile device. In that way, WhatsApps’ success bolsters the importance of SMS messaging, especially in North America, where WhatsApp has not gained traction.” – John Haro, chief technology officer, Vibes.
“We haven’t seen a shift like this since the initial rise of the mobile era. These messaging platforms are fast displacing SMS, voice as the primary channel is fading, even email is not fast enough to meet the needs of today’s always–on consumers. They want an instant connection to their friends, family and coworkers. [Also,] it has taken a long time for brands to successfully leverage social as a means to build relationships with their customers and to understanding the importance of being available to customers in their channels of choice. Brands need to move faster to keep up with rising consumer expectations. We’ve all just been put on notice.” — Anurag Wadehra, CMO of LivePerson.