- WhatsApp will give Facebook critical mass and global footprint that it needs – especially in LATAM, Europe and India
- If Facebook ties to monetise WhatsApp too quickly, it has far too many rival apps with significant scale that could absorb WhatsApp deserters if they feel the app has been compromised by the takeover
- When Mark Zuckerberg announced the deal, he also disclosed incredible growth stats for WhatsApp -- it is growing my 1 million users per day, there are 315 million active daily users and 600 million photos uploaded per day
- Facebook will be acquiring a company that has shown faster growth in its first four years than Gmail, Twitter, Skype and Facebook itself
More than 50 per cent of Facebook’s advertising revenue is coming from mobile. The social media network’s strategy — that began with a mobile-first thought process, manifested into a multi-app offer, considered feature phones that are still prevalent in large numbers in fast growth markets such as India and Indonesia amongst others, and a non-invasive advertising policy — is said to have contributed to what is appearing to be a very successful mobile play. Many believe that the USD 19 billion acquisition of WhatsApp is to augment this mobile strategy. But does this have any impact on advertisers?
Omnicom Media Group’s APAC Chief, Cheuk Chiang, cautions that while the deal itself has implications for the communication business, from a strict advertising viewpoint, it is still a wait and watch. In a conversation with DMA, Mr Chiang speaks about the impact of the acquisition, what the brands should do in road ahead and whether advertisers should have any expectations from this in the current state.
How the acquisition impacts the brands?
Facebook made a very clear statement that its future is in mobile so this acquisition is a sign that it is serious about growth in this space. WhatsApp will give it critical mass and global footprint that it needs – especially in LATAM, Europe and India. The global messaging arena is a huge growth area, especially in Asia where Line, WeChat, Viber, Nimbuzz and Kakao all have significant traction. All of these platforms are seeing exponential growth in their user-bases, as the world becomes more connected.
WhatsApp will benefit from more brain power and the wealth of resources available to Facebook. At present, the WhatsApp team has less than 60 employees including engineers so it will clearly benefit from a huge support network of great minds and a rich research and development (R&D) ethic.
Advice to both brands to make the acquisition work…
WhatsApp will need to decide how pure its product remains versus how quickly its monetises its offering. It has grown so quickly by staying true to its core offering of excellence in messaging. While other rivals have diversified with stickers, games and third party content, WhatsApp has resolutely ensured its product has no advertiser or brand noise, which is why it has become so popular and is adding over 1 million new users a day.
Early signs are that WhatsApp will maintain its independence and will not interfere with the FB Messenger team. If Facebook ties to monetise WhatsApp too quickly, it has far too many rival apps with significant scale that could absorb WhatsApp deserters if they feel the app has been compromised by the takeover.
There is bound to be buzz around WhatsApp for the coming months and I expect it will see another big surge in users as a result of the PR from the takeover. I would urge Facebook to allow WhatsApp to continue to run independently. Facebook did not put ads into its mobile News Feed for a very long time – it wanted to encourage habitual browsing with its user base before taking a very non-invasive approach to ads. I would therefore expect them to tread lightly and not expect to see an immediate revamp of the WhatsApp offering.
From an industry viewpoint, this would appear like further consolidation but what would you say is the larger implication?
When Mark Zuckerberg announced the deal, he also disclosed some incredible growth stats for WhatsApp. It is growing my 1 million users per day, there are 315 million active daily users and 600 million photos uploaded per day.
Breaking these numbers down, the scale and growth in WhatsApp is absolutely incredible.
From a photo sharing perspective, Facebook and Instagram users share around 400 million photos a day between them. SnapChat users also share around 400 million photos per day. WhatsApp’s 600 million is therefore a mind-blowing number.
Facebook will be acquiring a company that has shown faster growth in its first four years than Gmail, Twitter, Skype and Facebook itself. This rate is likely to accelerate and provide Facebook with even more presence in developing markets.
The other number that we must wrap our head around is that WhatsApp is processing 53 billion incoming and outgoing messages every single day, which is more than the global number of SMS texts processed by mobile networks. Telco companies are already expected to see a decline in revenue from SMS by USD 23 billion over the next five years but this may also accelerate as smartphone penetrations increase, data becomes cheaper and WiFi becomes more publically available.
Does WhatsApp addition help FB advertisers?
WhatsApp’s founder Jan Koum is vehemently loyal to the brand values ‘no ads, no games, no gimmicks’. This does not appear to change in the immediate future. It is difficult to see where WhatsApp may play a role for advertisers given this unwavering stance.
Mark Zuckerberg talked to investors about reaching as many as 3 billion people across their products in the future. This is currently around 1.2 billion, so WhatsApp will give them incremental reach in markets where Facebook are not as strong. There may be future plans to cross promote apps or link content between Facebook, Instagram and WhatsApp, so for now I think we’ll have to adopt a ‘wait and see’ approach before understanding how this acquisition will impact advertisers.