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3 reasons why Facebook forked out $19b for Whatsapp

Culture |

M&C Saatchi Mobile APAC MD Chris Steedman analyses why Facebook has just paid more than it has for anything else for WhattsApp.

Facebook has just spent $19 billion in cash and stock for smartphone messaging provider WhatsApp.

That’s more money than Facebook has spent on anything else, 19 times what it paid for Instagram for example. And it suddenly makes WhatsApp worth more than a large number of the phone companies it runs on.

It’s serious mullah in anyone’s language, especially when you consider FaceBook will, initially anyway, keep WhatsApp in the anti-ad style founder Jan Koum is famous for. Koum writes ing on his blog that users can “still count on absolutely no ads interrupting your communication”.

So why has Mr Facebook made this move? Well here's three reasons.

1 To reconnect with the youth audience

With more mums and dads and grand mums and dads getting on board, Facebook has widely publicised fears it is losing its cool cache and its touch with teens. Indeed its CFO David Ebersman said as much last November “from Q2 to Q3 we did see a decrease in daily users, specifically among younger teens”.

WhatsApp gives FaceBook instant access to a new and relatively large group of youngsters who are actively messaging each other on a daily basis. According to Facebook, the service now spans 450 million monthly users, 70% of which are active daily.

With more than 1.2 billion users worldwide Facebook is the globe’s most popular social network. But if they want to retain their global domination they must get with the platforms that the kids are on. It tried this last year with a failed $3 billion acquisition of Snapchat (check out whi it failed here).

WhatsApp holds the key to this future.

2 To capture emerging markets 

WhatsApp is more popular than Facebook in several large developing markets. According to a survey by Jana Mobile, respondees in India, Brazil and Mexico are between 12 and 64 times more likely to say WhatsApp is their most used messaging service, compared to Facebook.

Big countries with many millions of users that FaceBook wants to get their hands on.

3 Short-term pain for long-term gain

As mentioned Facebook won’t be getting any direct short term ROI on its $19 billion. But long term, it intends to derive incredible value from the deal.

For a start Zuckerberg is convinced WhatsApp is on a path to turn its 450m users into 1b and “the services that reach that milestone are all incredibly valuable”, he rightly observes.

FaceBook got to the messenger party late, it had a choice, continually play catch up or purchase the leader, and it’s chosen the latter.

And the big reason why is not what WhatsApp is, but what it will become for Facebook, a defence against anyone else stealing a march to dominate the messaging platform where billions of people will live to access each other and various forms of content, news, games and the like. See KaKaoTalk in South Korea or Line in Japan for dominant messaging players in Asian markets today.

Ultimately, services like this could be a great place to serve ads, if not now then perhaps down the track, just don’t go telling Jan Koum this!

Put simply, with the WhatsApp purchase Facebook intends to dominate the global Messenger space and in doing so look to ensure its global social domination well into the future.

M&C Mustaachi’s Miquela inks deal to get mo for life

Culture |

Movember’s come and gone, but it will always leave its mark on M&C Saatchi Account Manager Miquela McGuiness.

The Mo Sista got right in behind her bros at team M&C Mustaachi for their hair raising ride through Movember, pledging to get a ‘tache tattooed on her finger if the crew hit their $5k target.

The team hared home with $5,544 for the month of hirsute upper lip adornment and Miquela came good on her pledge last Friday.

She spent a teeth gritting hour in the chair at Work of Skin Custom Tattoo in Sydney’s Redfern as master tattooist Chris inked the deal.

“Yes it really hurt, but that’s nothing when compared to the likes of prostate and testicular cancers and men’s mental health,” Miquela reasoned.

“I’m really happy with the result. There’s no women out there more proud of their moustache than me.”

Check out the tache tattooing action here.

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