In the advertising business, there is only one true God: the attention span of consumers. A user’s attention, the only commodity that really matters, is something Facebook has been losing in the wake of the smartphone explosion. It really isn’t Facebook’s fault, though. The company’s raison d'être has been about public sharing, public broadcast and the cultivation of mostly superficial, social relationships.
Social media users don’t head to Facebook to have intense personal conversations. Enter WhatsApp and its other clones. WhatsApp is about the ephemeral and the private; about cultivating strong relationships with close friends.
Other points in WhatsApp’s favour are that it is a true creation of the mobile world. The application is light-weight and much easier to use than Facebook, which more often that not betrays its desktop biases. Every second a user spends in WhatsApp, therefore, is a second lost to the Facebook advertising machine.
With the acquisition of WhatsApp, Facebook CEO Mark Zuckerberg has thrown in the towel it appears. Even if his engineering team could build a WhatsApp equivalent (which they cannot), Facebook’s reputation is set in stone now. Nobody wants to conduct private business on a public Facebook. This is why it’s wrong to gape in awe at the $19 billion tag. Think of it this way — is Facebook wrong in spending roughly 10% of its market value in buying the market leader of an aspect of the “social” business that it effectively cannot enter?A veritable umbrella
And make no mistake: Zuckerberg intends to build a “social portfolio” of businesses that intends to capture each aspect of “social”, with Facebook dominating casual “social” and WhatsApp dominating serious “social”. A social business empire, if you will, where Facebook the social network website will be the crown jewel, but not the only jewel.
If anything, it is a little shocking to see how quickly Facebook has reacted to the threat of disruption. It is a striking contrast to how meekly technology companies of the past (Kodak, Nokia, BlackBerry) folded and gave up.
In all likelihood, there will be no integration of WhatsApp into Facebook—the messaging service is far more useful if it is kept at an arm’s length. WhatsApp’s user data will be funnelled into the Facebook advertising engine to create more effective advertisements. Facebook will then use WhatsApp as a medium to build on the social, e-commerce ecosystem.
The only question that remains: What will run out first, Facebook’s cash flow or the number of social messaging applications that will need to be bought?