By Gaurav Pradhan
Social Media Network was caught in surprise with Facebook–WhatsApp Deal, a whopping US$ 19 Billion. This deal raised some speculations in the market. Is this deal unreasonable in terms of Facebook ?
Facebook doesn’t think so.
WhatsApp currently has 465 million monthly active users and 330 million daily ones across the globe. The number is growing at a rapid pace of 1 million every day. The sent message traffic is 19 million daily.
All this growth occurred in a short span of 5 Years.
What made WhatsApp popular in such a short time ?
The main differentiator was – ‘Clean WhatsApp’, that is, Lack of advertising on the app. The ease of messaging, hassle free service helped them acquire more users. This growth was unplanned and uncontrollable for WhatsApp. The founders decided to slow down the growth by switching the operational model from Free to a Paid service. But still by 2011, WhatsApp was among the Top 20 apps in U.S App store.
Why Facebook showed interest in WhatsApp ?
The answer is simple – slowing growth. Facebook is slowly losing the young age demographic segment on which they have leveraged over the years. This slowdown is in many parts of the world which is a cause of concern. WhatsApp acquisition allows them regain growth in terms of users.
WhatsApp has a user base which spans from a Facebook user with a smartphone to a smartphone user who hasn’t used Facebook or its other services. This provides an opportunity to get those users under Facebook’s umbrella.
Facebook is also eyeing on the $1 Annual Fee per user, which is estimated to be US$ 20 million in 2014.
But the bigger picture behind acquiring WhatsApp is ‘Permission SMS Marketing’ Model in which Facebook will allow companies to push promotional SMS and give the control to users over their permissions to receive or deny SMS marketing. This model is estimated to generate revenue of US$ 3.2 billion per year.
But this model can backfire as users always liked the ad-free platform and trusted WhatsApp with their phone numbers which they never like to share on a Social Media platform.
The Big Question is now – Will users entrust the same faith in Facebook ?
(Author is a Management student of IIM Bangalore having an experience in Manufacturing Industry, Follow On Twitter @GauravToYou)
Also Read :
WhatsApp founder talks about the future after his $19 billion deal with Facebook-http://www.washingtonpost.com/news/morning-mix/wp/2014/06/06/whatsapp-founder-talks-about-the-future-after-his-19-billion-deal-with-facebook/
By the numbers: 19 Amazing WhatsApp Statistics-http://expandedramblings.com/index.php/whatsapp-statistics/#.U7b5FtKYhkM
Facebook to buy WhatsApp for $19 billion in deal shocker-
http://www.reuters.com/article/2014/02/20/us-whatsapp-facebook-idUSBREA1I26B20140220
