Facebook’s Plans For WhatsApp Involve Growth, Not Advertising And Monetization

By David Cohen 

WhatsApp650Facebook Co-Founder and CEO Mark Zuckerberg and WhatsApp Co-Founder and CEO Jan Koum both tried to quell concerns about the cross-platform mobile messaging application being overrun by ads following its acquisition by the social network Wednesday, during a conference call following the announcement of the deal.

Koum said during the call:

Monetization is not going to be a prioritization for us. We are excited by where we are going to be five to 10 years from now. We are focused on growth. We have the potential to have 5 billion users potentially giving us money through this subscription model.

And Zuckerberg added:

I don’t personally think ads are the perfect way to monetize messaging services.

Zuckerberg also said at various points throughout the conference call:

Our goal for Facebook over the next few years is to deliver a selection of mobile products. WhatsApp fits this vision perfectly. It’s the only widely used app we’ve ever seen that has more engagement and a higher percentage of people using it daily than Facebook itself.

Jan and Brian (WhatsApp Co-Founder Brian Acton) are clearly amazingly talented. With 50 people at their company, their product and network has almost half a billion people using it. No one in the history of the world has done anything like that before. It would be pretty stupid for us to interfere in a big way.

These guys obsessively focus on simplicity, speed, and reliability. When they go into a country, they don’t rest until their service is faster than SMS with the same reliability. It’s a company of really hardcore engineers … not adding a load of bloated features into a messaging app. People will be happy to pay for the best one.

Koum addressed the future of WhatsApp:

It’s important that the team continues to work at the pace of a startup … making the product better, faster, and more efficient. We care about details … It’s not very sexy — message speed delivery, battery life, bandwidth usage … You will see the product evolve in the next 12 months with new features.

And when asked about the $19 billion price tag of the deal, Facebook Chief Financial Officer David Ebersman responded:

The primary thing we focused on is how healthy the network is and how fast it’s growing. They are on a path to get to a network of 1 billion or more in a relatively short period of time. We looked at other networks of that size and scale and what they are worth, and that gave us a framework for what might make sense here.

The service is tremendously useful. Messaging is the No. 1 activity on smartphones. This is a valuable service people are prepared to pay for.

Reaction to Facebook’s acquisition of WhatsApp began to trickle in from across the industry, as well, as Eric Setton, co-founder and chief technology officer of messaging app Tango, told AllFacebook:

With this move, Facebook acquired a messaging service that has more active users than Twitter at half the price. Facebook has been trying to find its way on mobile, and it had a choice to make: Double down on its own product or reach outside and acquire companies that can help it succeed. Clearly, it is choosing to do the latter. The company is especially valuable to Facebook since mobile advertising is on the rise and it will be a good match to WhatsApp’s high engagement levels. Tango knows this firsthand, as we successfully introduced native ads last year. It’ll be interesting to see how WhatsApp’s “no ads ever” approach will play out now.

And Nathaniel Perez, global head of social for digital ad agency SapientNitro, told AllFacebook:

There will be no immediate implications to marketers, much like with Instagram. In the future, these acquisitions and the data they unlock on consumer behavior will help Facebook improve the intelligence, accuracy, and price of its advertising products, while helping it forge ahead in the age of digital behavior.

After unsuccessful attempts to capitalize on location, a few messaging faux pas, and a vague foray into TV engagement, Facebook is failing to get a handle on immediacy and spontaneity. WhatsApp is incredibly successful at it. And that’s why Facebook needs it. WhatsApp’s “youthful” levels of activity, combined with its massive reach, can give Facebook the data it needs to grow its now matured business. It should be fairly straightforward to link the two audiences, begin gathering an unprecedented level of data from WhatsApp activity, and feed the hungry algorithmic monsters at the heart of Facebook’s machine.

The acquisition is a smart move, but the intent to leave WhatsApp alone is simply an attempt to avoid putting this massive data opportunity under public scrutiny. The rest of the story is yet to unfold. Will WhatsApp stop growing? Will another leader emerge in this well-populated segment? To be continued.

Readers: What was your reaction to Facebook’s acquisition of WhatsApp?