Why Facebook’s $19B WhatsApp acquisition means nothing (at least for marketers)
Here in the U.S., just like everywhere else in the world, we love our text messages.
The ring or buzz of an incoming message will stop us in our tracks and pull us into a conversation that we wouldn’t have as a voice call otherwise. This “addiction” puts into perspective just how lucky we are in the U.S. because, for the vast majority of cell phone owners, we get unlimited text messaging included in our monthly bill. Consequently, we text and communicate with friends, family, colleagues nonstop, without fleeting thought or worry about the price. Ultimately, we don’t care about the technology that delivers our text messages; we just want to get and send them. But for folks overseas, it’s completely different.
Facebook’s recent $19 billion acquisition of WhatsApp, a mobile messaging service, has created a lot of excitement and also some confusion. On the Facebook conference call explaining the deal, Facebook founder and CEO Mark Zuckerberg said WhatsApp is on pace to reach a billion users (the service currently has 450 million users and is adding about one million users each day). Facebook’s chief financial officer David Ebersman said WhatsApp’s volume of messaging is nearly equal to all global SMS messaging. When people hear stats like that, they say things like this:
Which leads a progressive marketer to ask: So what? What does this mean for my SMS marketing initiative?
The answer: NOTHING, for three important reasons. WhatsApp messaging vs. permission-based SMS messaging
WhatsApp and other “over-the-top” messaging services are built for peer-to-peer (friend-to-friend) messaging. Most of these services are built around providing free messaging and then selling advertisements, personal information, and gimmicky in-app purchases like “stickers” and emoticons.
But a large part of WhatsApp’s popularity is based on its mantra: no ads, no games, and no gimmicks (the business is based on asking users for $1 a year). What this means is that — assuming Facebook keeps its word about honoring WhatsApp’s commitment to privacy — marketers will gain nothing from its user base, no matter how big it grows.
Direct marketers still have a fighting chance to build and maintain an ongoing relationship with their customers via their mobile phones. Text message marketing, or SMS marketing, continues to be one of the best ways marketers can connect with customers who opt-in to receive marketing messages — and it’s not going away any time soon.
The note above from WhatsApp cofounder Brian Acton sits on fellow cofounder Jan Koum’s desk as a constant reminder of their mantra.WhatsApp is huge overseas, not in the U.S.
The majority of the people in the U.S. had never heard of WhatsApp prior to the acquisition. That’s because in the U.S., WhatsApp is a solution to a problem we don’t have. Because U.S. carriers bundle unlimited text messaging in our monthly service plans — they are more focused on data plans — we already have access to unlimited SMS-based messaging that is reliable and easy to use, no app required.
But it can be very different in other countries. WhatsApp has become a household name in countries like India and Brazil, where SMS comes at a bigger cost. The often expensive cost of text messaging in other countries and cross-country complexities make using a 99-cent-per-year mobile messaging service a no brainer. That is also why, despite starting with the iPhone, WhatsApp made an app for old flip phones, which has given them many millions of additional active users.
This means the user base that would ultimately impact a marketer’s mobile strategy is simply not here. Even if WhatsApp starts tracking its users, the audience is just not there in the U.S. — and won’t be for quite some time.$19 billion reaffirms the power of messaging
Facebook has bought a mobile messaging service for $19 billion because it knows the true value of people communicating with each other on their mobile phones through messaging. In a lot of ways, the WhatsApp acquisition highlights what brands and marketers already know: that messaging is the most important thing people do on their phone (and it continues to grow and evolve).
Mobile users care about low-cost messaging, not the protocol used to carry their messages — SMS or messaging apps — and neither should marketers. Those who care about building and maintaining their mobile relationships are the ones who will truly capitalize on the network effect.
John Haro is the chief technology officer at Vibes, a mobile marketing technology company. Post comments and follow him at @JohnHaro.