By now, everyone has heard of Facebook’s acquisition of WhatsApp for $19 billion. It was the largest internet deal since Time Warner merged with AOL in 2001. Was it worth it?
The number of messages sent with mobile devices over the internet surpassed 10 trillion in 2013 and is expected to go beyond an astonishing 35 trillion by 2018.
With 430 million active users and 18 billion messages sent per day WhatsApp holds 45% share of that market.
With Facebook dominating the online social sphere with staggering 1.23 billion active monthly users, the deal will provide a strong protection in the domain for Facebook which arguably became a “mobile” company when it’s mobile ad revenue represented more than half of ad revenue in the fourth quarter of 2013.
However, for a company whose main driver of revenue is advertising, how Facebook plans to profit from their purchase remains uknown. This is especially true since WhatsApp has previously promised that the company won’t sell ads. Even Mark Zuckerberg, CEO of Facebook, said on a conference call about the acquisition that “ads are [not] the right way to monetize messaging systems.”
But get this fact. According to Buzzfeed, “Shares” to WhatsApp is greater than to Twitter on iOS. Since Buzzfeed integrated WhatsApp’s Share button on iOS in October, the number of shares doubled in ensuing months. Over 500 million images per day are sent every day via WhatsApp, which is more than Snapchat.
These astonishing numbers are attributed to WhatsApp position as a simple platform with a powerful value proposition. A single payment of $1 gives users access to an ad-free environment, a stark contrast to the heavily cluttered ad machine on Facebook.
Through their purchase, Facebook has acquired a huge pool of users with one objective – simple, direct and ad free messaging. How Facebook plans to integrate this new user base with their social platform remains anybody’s guess.