A DUMMIES GUIDE TO FACEBOOK WHATSAPP DEAL: SEX, LIES AND WINNERS.
Whatsapp has over 450M Users who use its chat messaging service mostly to share pictures, jokes, porn videos, nude clips and more such stuff. So why is Facebook valuing Whatsapp at USD 19 Billion? The below points will hopefully clarify doubts.
1) Most companies spend billions of dollars on advertising across media like TV, Print, digital and mobile.
2) TV is a mass media platform, I cannot customize my advertisement for each household, the same advertisement plays across all TV sets. In print as well, the same ad is printed on millions of newspapers or magazines.
3) The game suddenly changes on the internet connected devices world.
4) When you install an application like Whatsapp on your mobile or your tablet and start using it , you give away lot of privacy in return for free use. Whatsapp can tell which city you are using its service from, what is your age , on which operator you use Whatsapp, how frequently you use Whatsapp and what kind of stuff do you share on what’s app.
5) This data can then be sliced and diced for 450 M users and pre-packaged and sold to advertising agencies. Sample this “We have 3million males who are reaching puberty soon in India” – Perfect match for a Condom company who wants to run special promo to these users.
6) The sad part about the deal is the spirit with which the founders started the company saying they will not sell ads. Check out their original blog http://blog.whatsapp.com/
7) Facebook is already serving ads to its mobile user base and the advertising revenue of Facebook from mobile is growing faster than on the desktops. 53% of Facebook revenue comes now from its 945M Mobile users. http://techcrunch.com/2014/01/29/facebook-is-a-mobile-ad-company/
8) Clearly Facebook is going to start including the Whatsapp user base for slicing and dicing and packaging and selling to advertising agencies.
9) In this whole math, there is no clear measure of sales increase v/s advertising spends. So the whole game is built on a pack of lies. Most companies now how have a digital and mobile ad spend budget.
10) Companies take pride in claiming “I have 1 million user bases on Facebook “. How does that translate to sales? Tata motors are second most engaged car brand on Facebook. Pls go and look at their sales figures.
11) In summary, most companies have presence online because of fear of being left out by the young consumer and not participating on digital platforms. Without clear matrices and linking sales impact to advertising spend on digital, companies spend billions of Dollars on stupid advertising that gets paid to companies like facebook.
12) For a company like facebook, its stuck in a dilemma, how to grow top line by not compromising on user privacy. For now it seems to have taken a clear direction to grow its cash cow the mobile advertising pie by acquiring whatsapp.