Facebook and WhatsApp: The $19 Billion Consumer Connection

Posted by
Robert LoCascio
Founder and CEO
03/10/2014 - 12:25

What’s the big deal with WhatsApp? Yesterday’s acquisition of WhatsApp by Facebook for an estimated $19 billion tells us that the startup represents more than just a simple SMS alternative. While some are scratching their heads over the sheer size of the deal, consumers, brands, and Zuckerberg himself are seeing the massive potential behind WhatsApp and the new standard of connection. 

This is a big deal for several reasons. It’s a signal that “mobile messaging apps” are not just a fad, but are fast becoming the preferred standard for communication among the global population.  WhatsApp has garnered 450 million monthly active users since it’s 2009 debut, adding one million new users every day. Remember, after five years Facebook had only just reached the 200 million user mark. While WhatsApp is certainly the biggest in the messaging space, there are many others, like LINE and Snapchat that are also experiencing this exceptional growth both here in the US and perhaps even more so abroad.

A New Era of Communications

The rapid adoption of messaging apps like WhatsApp signals a new standard for peer to peer communication, and the acquisition itself from the social giant may prove to be a game-changer for the company, and the mobile/social industry at large. WhatsApp’s mission says it all: “Because we want to build a better SMS alternative. Because we believe we can. Because someday very soon everybody will have a Smartphone.”

An army of more than 1 billion smartphone users are now dictating the terms and the technologies they want to use to connect-- and they’re opting for cost-friendly, simple, and quirky apps to do so. Consider that WhatsApp users are processing 20 billion messages daily via its mobile platform.  Traditional SMS may soon be joining “voice” and “email” as the fallback options for communication, and clearly Facebook understands the long-term opportunities that acquiring this technology can provide for the stagnating platform.

 

Source: Forbes

 

So What Does It Mean for Brands?

Perhaps the true value of WhatsApp lies in its engagement metrics. “WhatsApp is the only app we’ve ever seen with higher engagement than Facebook itself,” said Zuckerberg during a press conference (Forbes). While the word “engagement” triggers excitement across the business and investment community, it’s not yet clear how brands fit into this equation.

The lesson that Facebook teaches us is that introducing advertising into these platforms can be a tricky endeavor. The last thing consumers desire during intimate conversations with friends is to be spammed by unwanted advertising. While there is not yet an obvious answer, there is no doubt that Facebook and leading global brands are heavily contemplating how they can tap into this growing network of “engaged” and “connected” consumers. How can brands create and sustain a meaningful relationship with their customers either within or in emulation of messaging platforms like WhatsApp?   

One thing is clear-- today’s consumers demand a different type of connection than they did just 5 years ago, and brands need to evaluate their engagement strategies to deliver on these evolving expectations. The brands that succeed will connect with their customers the way they prefer, wherever they are.

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