Thursday, 20 February 2014

Facebook buys WhatsApp: The Cost of Social Media


You normally wait until your 16th Birthday to do something outrageous. In brief, the 10 Year-Old Facebook has bought WhatsApp - an app that allows youngsters to LOL at each other - for some $16 to $19 billion dollars. OK, ‘only’ $4 Billion in cash, but it’s enough to live on. We look at what is in store for social media, digital marketing and business.

What does this mean … for Facebook

Well, that was a whopper of a deal.  Facebook needs growth and presence in emerging markets. WhatsApp has half a Billion users. This will allow them to capture the younger social media generation that they have been missing out on, adopt some technology and, of course, head off a major competitor at the pass.

It’s a tricky move taking out your competition. It can horrendously expensive when they are in a strong position, which WhatsApp are. Much of this deal is in equity so the true cost can be argued is far less. Facebook will be worth so much more by swiping market share so by diluting its stock its probably in a decent position overall - albeit letting any new start-up App Team that they too could have a SuperYacht if they are any good.

One thing is for sure, Instagram will be kicking themselves. In 2012 they sold to Facebook for an eye-watering $1Billion at the time.  Which might not be enough to live on or at least the Yacht will be smaller.

Where does this leave Facebook?

This is a very interesting year for the giant of social media. Floated in 2012 for something along the lines of the total GDP of Sweden (we don’t know, we’ve just made that up. It was probably more) the stakes are very high now.

Far from being the jeans-wearing, Starbucks waving and skateboard-in-the-office entrepreneurs of freedom, connectivity and sharing the landscape of social media now is big business.

On the surface Facebook is still great place to post about your life, complain, complain about people complaining or just read about people complaining about people complaining. It’s easy to knock it (“I’m on it but I never GO on it”) but in truth it’s really very good.

Yes, there are more Sponsored messages, more Suggested Pages and the news feeds act funny at times but its underneath is where things are changing.

What does it mean for business?

To get noticed and sell your stuff you had the old school advertising media of TV, Radio, print and the High Street. Each is its own way of getting in front of buyer traffic. These have all been getting slaughtered by the internet for quite some time now.  

Google was the biggest disrupter.  My iPad is now bigger than my Yellow Pages which is a sign of the times. But soon Google began to line us all up every month to pay dues to the SEO guys just to point a bit of the internet jet stream at their business.

Then along came Facebook. It was a superb antidote to the costs of all of the above. Set up a page. Stick on some funny pictures and away you go! There are pages on Facebook that serve no purpose whatsoever with literally millions of followers. Hurray! Goodbye SEO, goodbye 30 second adds. Suddenly marketing became easy. Everyone could do it.

Not so much anymore. Things are changing. No one is quite sure but check the blogosphere of Social Media guru’s and you will see declarations and wailings of foul and unfair play by Facebook, its search, its feeds, its algorithms. It’s what? Basically it’s changed how it works.

You could always sponsor and advertise on Facebook. See here. I’ve set up an advert on Facebook to profile maybe you. If you use a PC those panels to the right that you never click on? The thing was, you never really needed to. You post something, you Like it, your friends see it, they like it and your content moved….

Now Viral has caught a Virus. To move that content, the Bloggers argue, you need to pay to play. Pages are seeing their “reaches” are being strangled by upto a half or even more. Fair enough. But the above page is for a Community Group

But something was up. It was suspected as much. Ken Auletta in his 2010 book “Googled” noted how Google's initial business plan for search was to bounce you off their page as quick as they could. Whereas Facebook wants to keep you within their world for as long as possible - you can be “on” Facebook but not really “on” Google. Now they have built their captive market they are perhaps looking to cash in. And they will need to if this $19 Billion deal is anything to go buy. The cost of advertising is probably only likely to increase.

So, what does this mean for Social Media?

The pole has got greasier again. Facebook is by far the most dominant platform but easy and cheap virility has gotten harder. It’s kind of a good thing as plenty of trash content will die away. Watch out for lots and lots of sharing scams (Share our page to win a Car…House….Unicorn…).

What should you do as a business? Well, its sign to go back to good honest traditional marketing. The pursuit of Likes, Followers and Hits is all well and good but in the end it’s not replacement for real engagement, community-led ideas and a social purpose.  Social Media is still incredibly important but it’s so much more than “Post and Hope”. 

We suggest:

Diversify - Don’t put all your eggs in one basket. When you play in someone else’s sandbox, expect them to change the rules

Professionalise yourself – Linkedin is a great place for this and it’s astounding how few companies have not set up a Company Page for people to follow. Even if you are a one-man band you can create a page, feature products, post messages. “People don’t like to be shop where they socialise” and isn’t it true you are in a different mood when you are on Linkedin and receptive to plugging and boast posts?

Blogging – gets your personality across, your knowledge and builds credibility.

Engage on Twitter – Its OK Tweeting about yourself, but will it get results? You will notice everyone is Tweeting about themselves and sometimes when people are trying to be heard no-one stops to listen. How about engaging? What do we mean? See an event that somebody is up to. Retweet it, attend it and follow up your new contacts. Its a listeners market. We guarantee you will be further ahead as a business than if you didn’t. Or your money back.

Create your own community – forums, networks, semiars, workshops, meetings. It can all help.

Mobile apps – mobile is screeching past PC use. Cut through all the noise and park yourself right next to Candy Crush and Talking Tom on everyone’s most prized possession.

Use Professionals – the cream always rises to the top and top agencies can help. There are plenty of people professing to know about the Black Magic of SEO and all that so take recommendations. And stop sharing pictures of Cats to get people to like you.

Measure - track your success and investment in terms of revenue. Always.

See this great Infogram for more ideas.


Well, we see this as a natural progression. Platforms become fun and then fun becomes media and media attracts the money men.

There is clearly a demand for viral platforms. And clearly people and business prefer them to be free. This year might be year where Facebook Mark II is born.

Anyway, we all had the last laugh.

Mark Zuckerberg paig $19 Billion for WhatsApp.

We downloaded it for free.

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