What’s On

Five points from author Scott Bales on FB-WhatsApp acquisition

Highlights
  • WhatsApp’s 450 million active users are definitely attractive, but at USD 42 each (Facebook only paid USD 30 a user for Instagram) we are left questioning the value
  • But it does bring new, untethered consumer knowledge into Facebook which is likely to boost Facebook’s strength in mobile
  • With Facebook making key strategic acquisitions that essentially turn the media industry upside down, it is rewriting the rules in a similar manner that Amazon rewrote rules on what a book is
  • Each brand is strong in its own right, but when the knowledge of the two organisations is combined we have a powerhouse of consumer engagement

Mobile is the cornerstone of Facebook’s growth strategy. Even though the social media network is improvising its mobile-first proposition, FB’s announcement of acquiring social messaging platform, WhatsApp, is not something one would call ‘expected’. The development signals the new rules of a 21st century media company. So believes entrepreneur & author of Mobile Ready, Scott Bales.

#1 At USD 42 per user, is the deal too costly…
The acquisition is an interesting one, as close to 100 per cent of WhatsApp users are also Facebook users. The brand of both is hence unlikely to expand. That being said, Facebook has been keen to get deeper into the IM (instant messaging) space for several years. WhatsApp’s 450 million active users are definitely attractive, but at USD 42 each (Facebook only paid USD 30 a user for Instagram) we are left questioning the value. But this does extend Facebook’s media network into new ecosystems, deepening its consumer engagement.

#2 Reshaping 21st century media…
Majority of the key players in the digital domain are under 10 years old. Consolidation is imminent. It allows for the management of fragmentation, putting similar companies on aligned strategic journeys, which only acts to benefit the entire ecosystem. What this acquisition points towards is the reshaping of the media industry in the 21st century.

#3 Bringing untethered consumer knowledge to FB
The acquisition is unlikely to augment Facebook’s mobile strategy, which has been a ‘mobile first’ company for several years. But it does bring new, untethered consumer knowledge into Facebook which is likely to boost Facebook’s strength in mobile. The key boost to both companies is the collective knowledge and media convergence.

#4 Rewriting media rules
This is where the acquisition gets interesting — the assets and networks that Facebook is collecting puts it on a clear path to becoming and defining what a 21st century media company looks like. Gone are the days of hierarchical media groups that control the narrative and distribution of media. With Facebook making key strategic acquisitions that essentially turn the media industry upside down, it is rewriting the rules in a similar manner that Amazon rewrote rules on what a book is. Assuming Facebook continues on this path, it shows clear intent to be a media group, owning consumer and brand engagement (powered by the OpenGraph). Facebook already has direct media and advertising models, which could decrease the need for middlemen in the ad space.

#5 Advice: Stay independent but combine knowledge…
I’d suggest that like the Instagram acquisition, WhatsApp will be left as an independent company but with access to Facebook’s resources, which could accelerate its user growth. My recommendation to the two companies is to keep the independence but share knowledge and network intelligence. Each brand is strong in its own right, but when the knowledge of the two organisations is combined we have a powerhouse of consumer engagement.

Noor Fathima Warsia

A veteran journalist in the Indian marketing, media and advertising fraternity, Noor Fathima Warsia took on the role of Group Editor -– APAC for Digital Market Asia in May 2013. Noor has focussed on tracking trends and developments in the Indian media industry.
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