Last week, Facebook purchased mobile messaging company, WhatsApp, for the astronomical sum, even for industry standards, and for 16 times as much as they paid for photo-sharing application, Instagram.
Facebook has a history of scouting out competing apps, so this hefty purchase comes as no real surprise. But why does this simple messaging service interest Facebook so much? As an application that does not run advertisements on its services, growth, and not profit, has been more of a focus for WhatsApp, according to co-founder and CEO, Jan Koum.
With 450-million users, WhatsApp boasts only about half of the users that Facebook has, however 70% of WhatsApp subscribers are daily active users, which is of great interest to Facebook.
So what makes WhatsApp worth $20-billion dollars?
- A younger, loyal user-base
- Daily engagement by a large percentage of users
- A message volume of an estimated 7.1 trillion message a year
- The ability to unite all smartphone devices, iPhone, Android- even Blackberry- through one messaging service
Instant messaging within personal networks is where the public is engaged the most- connecting instantly with family and friends, sharing photos, videos and web links. As a marketing expert, I know that you can’t put a price on consumer engagement. It’s truly no surprise Facebook wants to capitalize on a built-in, captive audience.
Do you think Facebook had strong foresight with this business decision? Do you use WhatsApp? Do you think it’s worth $20-billion dollars? I look forward to your thoughts below.