Upwardly Mobile – What the acquisition of WhatsApp says about the future of Facebook
You probably know by now that Facebook just bought WhatsApp for a staggering $19 Billion. To put that into perspective, a company which is only a few years old now has a value more than 1.5 times the GDP of Iceland. In the two years since Zuckerberg’s Facebook spent $1 Billion acquiring Instagram, it has upped the stakes to a degree which has taken even the most seasoned analysts by surprise.
The reality however is that although Facebook is still the most popular social network on the planet, it faces two very fundamental challenges. The first challenge is the incredible growth of ‘Mobile’. The explosion in the use of smartphones and tablets has radically transformed the way in which we consume information. When you consider that Facebooks platform was originally designed to be used on a PC, the company now has the Jurassic task of constantly adapting their business model to meet users’ new browsing habits. The challenges which this offers can’t be underestimated as Facebook must find increasingly innovative ways to fit all of its offerings on the screens of users phones, in an attractive and user friendly fashion – while still generating advertising revenue!
Mobile has also opened up a new land of opportunities for innovative start-ups. Today companies with clever mobile solutions can gain the kind of traction which could turn them into serious competitors for Facebook in the long-term. WhatsApp’s user base of 450 million is a prime example of how a clean and effective product can achieve mind-boggling organic growth. When taking these into account it is clear that facebooks acquisition of WhatsApp not only provides it with a new avenue to mobile technology, it also neutralises a potentially serious competitor.
The second challenge which Facebook must overcome is it’s aging demographic. Like it or not, the age profile of Facebook has been reportedly increasing in recent years. Tweens and teens have no desire to be friends with their parents online and instead have struck out to find their own social networks, free from scrutiny and in facebooks case – adverts. Newer platforms such as Snapchat and WhatsApp have distinctly younger audiences and provide Facebook with a stepping stone to maintain contact with the precious youth demographic. Younger demographics tend to be the heaviest users of social networks and as such represent a lucrative target market for advertisers.
So it’s clear that Facebooks acquisition of WhatsApp will allow it to do three things: stay in the race during the ‘mobile’ era, neutralise a serious competitor and maintain contact with a key demographic. As to whether that’s all worth $19 Billion, only time will tell.. One thing which is almost certain though is that this won’t be the last or even the largest or acquisition we ever see.
Brian McCarthy is the Sales & Marketing Director with Newsaccess Media Intelligence, based in Dublin 2. For more information on Media Monitoring & Analysis contact Brian at: mccarthyb@newsaccess.ie or 01-6799403
