How Facebook will benefit from Whatsapp
Facebook purchased Whatsapp for a whopping US$19 billion. Here’s how we think they’re justifying the price tag.Considering it’s valuation in July 2013 was less than a tenth of that with about half as many subscribers, that indicates FB sees a lot more value to be gained than the current revenue from subscriptions. Which is a quandary, because the platform is built on a foundation of “no ads”, something the founders have re-iterated on their site’s home page and this recent blog about the acquisition.
Where does FB see the value, if not advertising? The Next Web has some thoughts on why Whatsapp was a steal. Josh Constine posted on TechCrunch about how Facebook’s resources will supercharge Whatsapp, and while it’s exciting to think how this awesome app could get awesome-rer with all that mental muscle and coding power behind it, it doesn’t answer the money question. Here’s a couple guesses:
Fan Page Customer Service Overflow
Facebook Fan Pages are great for a lot of things, but customer service communication isn’t one of them. No matter how attentive you are, the system simply isn’t built to channel, manage and track customer queries, complaints and communications. Community Managers can do their best to channel that process into other avenues and applications but people more often as not want their query dealt with where they made it.
There are amazing platforms focused on this task, but they still leave a gap on the consumer’s side between where the query is taking place, and where the conversation continues. Making the process more difficult for them adds to their ire instead of soothing it.
What if a system were developed that provided one touch transition from a comment placed in Facebook to a one-on-one discussion on Whatsapp? The transition could be seamless for the consumer while automatically pulling the discussion into a platform designed to make sure they get what they need, turning Whatsapp and Fan pages into a peaceful duck floating along on the surface and a powerful CRM machine kicking away below. There could even be some cool social integrations to close the loop and deliver a satisfied customer back to the page, possibly through some form of review or rating process. We love Flawsome! Better page experience means more traffic and more positive sentiment.
Monetising this would be easy, because every page manager on the planet would beg for it after answering their umpteenth query posted as a comment on a photo post and watching their engagement drop because they can’t keep up with the quantities.
Tracking Chats To Target Ads
Facebook’s ads are targeted based on what its users are saying in public. Imagine how much more effective advertising would be if it was also tailored according to things people were saying in private? This sort of research creeps people out. It has a sense of invasiveness that often disturbs the public.
But if you stop thinking of it as an invasion of privacy and start thinking of it as problem resolution, the perspective changes. When you go to a doctor for a diagnosis, you want them to have as much information as possible. If you view advertising as a service, the same applies. The more the ad server knows about me, the better it can tailor what I see.
If I’m interested in surfing, I may see an ad for a brand’s fan page and be inclined to click on it. But if I’m discussing with my friends how cold the water was this morning, I’m going to be a lot more interested in an ad for a 50% off sale of wetsuit tops at the local surf store.
Greater accuracy and relevance could turn into a higher click through rate and more revenue.
Jan Koum announced recently that Whatsapp will soon roll out voice services. If they use a credit model similar to Skype’s this could be the big win. That’s a big database to start with, it’s growing buy a million a day, and their rates will most certainly be competitive.
This one’s a bit of a stretch, but it deserves to be included. If Whatsapp can accurately and effectively segment it’s userbase, it could offer a powerful direct marketing platform to brands. Of course, this kinda flies in the face of their “no adverts” policy, but again, it comes down to the usefulness of the message. Consumers may not balk at promotion that adds to their lives, but that’s a difficult standard to maintain.
Whatever Facebook’s intentions, it’s certain they see Whatsapp as more than what it already is. What that may be, and when we’ll find out, are questions yet to be answered.