A Facebook spokesperson said the company doesn’t comment on rumor or speculation, as did Waze’s vp of platforms and partnerships Di-Ann Eisnor. But there had been speculation previously around Apple being interested in buying Waze—the mobile app owes much of its success and high profile to Apple’s flubbed Maps app—but Facebook seems a better suitor to scoop up the social map app and improve its local marketing strategy.
Chris Tuff, svp and director of emerging media at digital agency 22squared, pointed to a survey by research firm IDC that Facebook sponsored earlier this year and showed GPS/navigation as a top-ten smartphone activities but one of the few that Facebook has yet to crack. “This move would allow Facebook to have a touch point across a user’s entire mobile experience,” said Tuff.
Facebook has proven in the past year that it can monetize its mobile users. Mobile accounted for 30 percent of the company’s ad revenue in the first quarter. Waze could catalyze and help Facebook better compete with Google to secure a greater share of rising mobile ad budgets, especially given the number of local marketers supplying those dollars and directing them toward mobile search. Research firm BIA/Kelsey forecasts U.S. mobile local ad spending will hit $16.8 billion by 2017, with $5.7 billion going to mobile search.
As Facebook’s recent redesign of businesses’ mobile Pages indicates, the company wants to get better at indexing and serving up local information. That could make it more attractive as an alternative to Google, Yelp and Foursquare for people looking to find a restaurant or store while on the move, and in turn make it more appealing to those local businesses trying to drive foot traffic. Facebook’s already trying to prove the link between its ads and in-store sales via the Datalogix partnership, but Waze could help Facebook not only trace but facilitate that connection.
“It fits the paradigm of the real-time status, which is the lifeblood of the News Feed. [By acquiring Waze], you add an additional dimension to not just what you’re doing or thinking but where you are and where you’re going,” said BIA/Kelsey senior analyst and director of content Michael Boland.
Not only would a Waze acquisition loosen Facebook’s dependency on Bing maps, but it “would greatly impact how Facebook could own local at the place you need it most: in your car. Think about driving with Waze running and getting recommendations based on your social graph…this is huge,” Tuff said.
Then think about the data Waze already packs on its more than 30 million users’ driving habits. Assuming someone uses its app fairly regularly, Waze can firmly grasp where its users tend to be at different times of day and make it easier to process and advertise against that behavior. That’s more aligned with how Facebook likes to surface content for its users.
“Facebook’s new paradigm is the real-time sentiment: what you’re doing, saying and seeing and what your friends are doing. The real-time traffic and location-based information Waze would bring into the fold extends that capability with a real-time mosaic of content to make the product more sticky for users and toward the eventual goal of making it more attractive for advertisers,” said Boland.
Waze is already attractive to advertisers such as Best Buy, Procter & Gamble and Wyndham Hotels who have bought into the ad platform it rolled out last fall to let brands run ads navigating users to stores. For example, Whole Foods could place a branded pin that includes a coupon on the Waze map aimed at people about to head home from work and looking for dinner ideas. Users can then click the app to navigate them to the promoted location, and Whole Foods would be able to see that not only did they drive to the store but also if they used the coupon, closing the loop on the campaign’s effectiveness without any need to correlate an estimated conversion rate.
Now imagine Waze’s ad platform—which could also continue to exist in the standalone app à la Instagram—wrapped inside Facebook. The easiest integration would be mobile News Feed ads dangling coupons and offering to direct users to stores. But the real value lies in Facebook’s local discovery product Nearby and the eventual mobile roll-out of Facebook’s Graph Search. Not only could Waze help surface a restaurant’s click-to-drive ad when a user searches for, say, “sushi restaurants in San Francisco,” but Waze could help improve the algorithms powering Nearby and Graph Search.
As Google, Yelp and Foursquare have proven, robust local search requires data, lots of it. Companies can either gather that data over years via maps apps or check-ins or through partnerships with navigation companies like TomTom. For Facebook the strategy could be to combine Waze’s navigation data with the locations appended to Instagram photos and Facebook posts.