Marketers - Facebook's acquisition of WhatsApp highlights your mobile challenge

  • 20-Feb-2014

When Facebook announced the acquisition of cross-platform mobile messaging tool WhatsApp for a “sticker-shock-defining" price of $19 billion, it stoked an immediate debate on whether Facebook overpaid. But setting aside valuation concerns, there are many interesting takeaways for enterprise technologists and digital marketers.

The silent plague of enterprise technology is adoption – frustrating project sponsors as many applications languish with insufficient uptake. We typically see two main culprits here: no clear “what’s in it for me,” and less than satisfactory user experience. The phenomenal rise and rise of WhatsApp – 450 million users, 70% of whom use it everyday – is due to cracking both these tough nuts.

While SMS was the killer app for early mobile customers, WhatsApp is SMS-plus for smartphones. It takes the classic use case of text messaging and nicely updates it to take advantage of the smartphone’s versatility – you can include location information, add pictures from the phone camera/photo album, and leave recorded voice messages - using either the cellular network or a local wi-fi. There are no passwords to remember; your phone number is your user id, and all the contact numbers stored in your phone automatically become part of your social network, so among other things you can easily have real-time group conversations in private. Reducing friction considerably enhances the user experience. In short, WhatsApp lies in the sweet spot where usefulness happily intersects with usability.

While WhatsApp is neither the first nor the only mobile messaging service around, early messaging services tended to be closed (think the early Blackberry messenger which was popular but only for Blackberry devices and others), and somewhat limiting their usefulness. If you’re a votary for consumerization of Enterprise IT, WhatsApp is a prime exhibit.

Let’s examine the marketer perspective next. Increasingly, as we note in our Enterprise Mobile Technology, the mobile device is becoming an important (and in some cases the only) interface through which services get consumed both in B2C and enterprise scenarios. Stock market analysts tend to label this as "Facebook’s mobile problem" or "Google’s mobile problem," but you should think about it is your problem too: how to engage purposefully with those migrating to the mobile.

Currently, WhatsApp has been largely left alone by enterprise marketers, but we've seen some emerging attempts to use it for engaging consumers, like Absolut’s campaign in Argentina (where users try and win passes to a party by leaving WhatsApp messages), or a similar campaign by Israeli chocolate brand Klik. Of course, like nearly all successful social media forays, these campaigns represent “high-touch” efforts, rather than simply serving an ad.

The combination of Facebook and WhatsApp is curious as they are a study in contrasts. Facebook makes its money by being an "ad clearing house" while WhatsApp hates ads (or at least thus far hated ads). Facebook claims that it’s free and always will be so, while WhatsApp held that when a service is free, the product is the user and instead charges a buck a year for its service. WhatsApp does not retain user posted messages (it deletes them after delivery), while Facebook is busy trying to mine user data for monetization.

By the way, WhatsApp Terms of Service state that in the event of an acquisition they may transfer or assign user information. Though WhatsApp may not immediately start serving ads, Facebook may hope to cross-reference and leverage WhatsApp user data to make its ads and content more targeted and relevant. Changing WhatsApp’s currently privacy and user data policies and aggressively trying to monetize user data may put off users and stall their growth. But after today, at least new users are likely to be aware that in the future, such monetization attempts are going to happen.

WhatsApp may be the biggest mobile messaging service but there are several others – notably LINE, Viber, WeChat, KaKao – all of which have users numbering in the hundreds of millions. More than just messaging services, you should  think of them as social networks on the mobile. Marketers have to figure out a way to gain attention on these apps/networks without coming across as intrusive. Marketers in general have tended to be less than gung ho about the mobile channel because of the constrained ad formats and choices, but I don’t think we’re going to have a choice about that any longer as consumers spend so much time on their mobile devices.

Interesting that in the context of WhatsApp, analysts are talking about Daily Active Users while in the context of social networks, the metric is Monthly Active Users.  Guess which interface users are turning to most often.

So, Facebook's purchase of WhatsApp signals (or rather screams) the arrival of the mobile channel. Are you ready?