Today we woke up to the biggest news in Tech so far this year. Facebook’s $19 billion acquisition of WhatsApp has already got people worked on what will become of the popular messaging app, which arguably has more users than Facebook in Zimbabwe. Both parties in the deal moved quickly to squash any uncertainty on whether WhatsApp will now ditch its famous “no ads, no games and no gimmicks” policy to enable the new master to recoup it’s $19 billion.
It’s easy to speculate that the WhatsApp statement reassuring users that nothing will change about the app is just a way to ease out the transition and avoid a mass exodus from ad resistant users.
Facebook founder, Mark Zuckerberg, also eased fears by saying “WhatsApp will continue to operate independently within Facebook. The product roadmap will remain unchanged and the team is going to stay in Mountain View”. However, earlier remarks in his statement are bound to raise some eyebrows.
Our mission is to make the world more open and connected. We do this by building services that help people share any type of content with any group of people they want. WhatsApp will help us do this by continuing to develop a service that people around the world love to use every day.
Loosely read, that statement had nothing in it but speculatively, phrases “help people share any type of content with any group of people they want” may translate to advertisers sharing advertising content to their desired target market, which of course, WhatsApp will help Facebook achieve, or do better.
The Whatsapp acquisition also has some similarities to Facebook’s purchase of Instagram in 2012 that Facebook says it used as a “template” for this new acquisition. Let look at the Instagram purchase and subsequent changes that came to it.
Announcing the $1 billion acquisition of Instagram, Mark Zuckerberg said Facebook was “committed to building and growing Instagram independently” and “our goal is to help spread this app and brand to even more people”. Fast forward 18 months, Instagram announced ads by saying;
We have big ideas for the future, and part of making them happen is building Instagram into a sustainable business. In the next couple months, you may begin seeing an occasional ad in your Instagram feed if you’re in the United States. Seeing photos and videos from brands you don’t follow will be new, so we’ll start slow. We’ll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands that are already great members of the Instagram community.
So if the Instagram is a template to the WhatsApp acquisition, then we shouldn’t expect any drastic changes to WhatsApp as yet. WhatsApp will likely retain its brand and work independently just as Facebook says. However, the pace at which Facebook will introduce ads will be determined by how fast WhatsApp reaches the 1 billion user milestone.
Facebook said WhatsApp is well on course to reach 1 billion users which suggests a target is at play here.
Going to the back to the Instagram template, Facebook acquired it when it had just 27 million users and expecting a surge in users after it became available for Android devices. Facebook however, only introduced ads 18 months later after Instagram had reached 150 million users, a pattern which they are most likely to follow with the WhatsApp purchase.
Interestingly, Mark Zuckerberg says he does not think advertising is the right way to monetise messaging because of the private nature of chatting, but this is not about right or wrong. Investors, and advertisers themselves, will be crying for ads on any platform with 1 billion users.
There is no business reason why Facebook should not introduce adverts. The only question should be how soon. Facebook’s primary revenue model is ads and there is no reason why they would part with $19 billion on a company that does not support the model. Both parties have already said they won’t even prioritise $0.99/year subscription that WhatsApp charges in some countries but instead focus on subscriber growth.
Of course this is all speculation but all bets are on Facebook focusing on growth, until they reach 1 billion users. After that, no ads, no games and no gimmicks will likely fall to the way side one way or the other.
When will all this happen?
With Whatsapp adding 1 million users daily, it should be in the near future.