Choose speciality channel:   Choose sector channel:     Search the site

News Analysis

 

Four key benefits from Facebook’s acquisition of WhatsApp

Four key benefits from Facebook’s acquisition of WhatsApp

By Nick Cooper, managing director at Millward Brown Optimor

When you pay $19bn for something you expect to attract criticism. After all it’s a lot of money for a service that’s only five years old and employs just 55 people.

But like Instagram before it, WhatsApp is a strategic acquisition that builds Facebook’s position in mobile and creates a platform that brings with it powerful advantages.

Correctly managed, this acquisition could deliver in four clear areas:

The first of these is scale. WhatsApp is already big – and has more than 450m users (320m of whom are active daily) and is growing incredibly fast with around 1m new joiners every day. While there is clearly a lot of crossover between the WhatsApp audience and the Facebook user base, it will give additional reach and frequency, in the same way that ITV 2, ITV 3 and ITV 4 boost ITV’s total audience share.

Given its scale, WhatsApp also has the potential to be highly profitable. It’s freemium business model – free for a year and then just $1annually – is clearly pitched to keep users on side, whatever their income.

The second area is cost. The arrival of closed communications networks such as WhatsApp created a challenge for social networks, which were by their very nature more open. As more users – and particularly younger ones – opted for networks and tools that enabled them to communicate privately, Facebook was faced with a challenge. Did it build its own system or buy one? Not only would that have been extremely expensive but we know from experience that it can be extremely hard to displace a dominant digital service. WhatsApp is already the dominant provider in many markets, particularly in Europe and India.

The third benefit is brand value. Buying a popular service should – if correctly managed – ultimately enhance Facebook’s relevance and appeal. The announcement at Mobile World Congress in Barcelona that WhatsApp will add voice communications services to its portfolio is just the start of the potential. With Facebook’s resources, the ability to build additional utility into the service will only be enhanced and that will only benefit consumers.

Finally purchasing WhatsApp will deliver clear business benefits for Facebook. Although WhatsApp has foresworn paid advertising – and it needs to keep this pledge to stop consumers seeking alternatives such as Telegram, Line and Wickr – bringing more users into the Facebook fold and encouraging existing users to spend more time with Facebook brands can only boost the use of other Facebook services via smart integration.

The $19bn question is whether these four areas of business benefit are enough to justify the purchase price.

Facebook is now worth more than $175bn and can clearly afford to pay but what if it had let WhatsApp continue to develop as an independent company, a brand rooted in mobile and garnering millions more regular users every day?

Potentially it would be restricting its own growth prospects and allowing no-go areas of communications to develop.

If you view the purchase as eliminating a potentially serious long-term rival, then the price tag of $19bn suddenly seems much more sensible.

free discount prescription cards site online viagra coupons
viagra discounts coupons link viagra coupons printable
can i take augmentin if i\u0027m allergic to sulfa can i take augmentin if i\u0027m allergic to sulfa can i take augmentin if i\u0027m allergic to sulfa
after abortion abortion article abortions clinics
abortion research paper open abortion doctors
prescription coupon card bioselect-us.com prescription savings card
cialis discounts coupons go pet prescription discount card
how to abort a baby aspiration abortion cost early abortion options
prescription card discount link cialis coupons from manufacturer
amoxicillin dosage for a uti amoxicillin dosage for a uti amoxicillin dosage for a uti
metformin and ketogenic metformin and ketogenic metformin and ketogenic
forest laboratories patient assistance read forest patient assistance
discount coupon for cialis read coupons for prescriptions
cialis dose 30 mg cialis dosage for a 65 year old man cialis dosage for enlarged prostate
naproxennatrium naproxen en ibuprofen naproxen nsaid
yasmine yasminelle hinta yasmin senel
kamagra 100 realtycollective.com kamagra jelly
printable coupons for cialis aero-restauration-service.fr cialis coupons 2015
free cialis coupon ainalfaras.net coupon for prescriptions
spontaneous abortion pill pro abortion spontaneous abortion pill
cheap abortion pill clinics abortion pill articles anti abortion pill
addyi suomi avonotakaronetwork.co.nz addyi fda
amoxicillin dermani haqqinda amoxicillin amoxicillin 1000 mg
abortion pill articles abortions cost abortion pill alternatives
lamisil para que sirve avonotakaronetwork.co.nz lamisil
abortion at 15 weeks abortion clinic dc abortion rules
low dose natrexone open revia uses
opiate antagonist naltrexone open revia for alcoholism
what is vivitrol used for house.raupes.net naltrexone implant locations

Check out 12ahead, our brand new platform covering the latest in cutting-edge digital marketing and creative technology from around the globe.

12ahead identifies emerging trends and helps you to understand how they can apply to modern-day companies.

We believe 12ahead can put you and your business 12 months ahead of the competition. Sign up for a free trial today.