Thanks to some exciting recent personal news, I've been a bit behind with posting a few things here, but after Facebook announced its $19 billion acquisition of WhatsApp, I was able to bang out a few words for Ad Age on what this means.
Here&39;s my original versio of the column below (meaning: the version on Ad Age probably reads a bit better).&0160;
Five Rules for a Post-Facebook World
What would the world be like without Facebook?&0160; Facebook isn’t just preparing for a world like this; it is now actively trying to create it. The $19 billion WhatsApp acquisition is Facebook’s most ambitious preparation for a world where Facebook loses its relevance.
It’s conceivable that Facebook as a destination and media property could disappear, and the company could thrive more than ever. What will be left? Backup tools for contacts and photos, a barebones event management service, and a valuable default login mechanism used to connect one’s identity across digital media.
With the acquisition of WhatsApp, Facebook came up with its answer to a popular internet meme: which would be more victorious in battle, 100 duck-sized horses, or one horse-sized duck? Facebook is now responding that it’s better to build and buy an army of horse-sized ducks. Those ducks include Instagram, which Facebook had to acquire. Facebook’s Messenger app is popular enough, but if it was truly successful, it wouldn’t need to sign 11-figure deals to acquire competitors. Facebook’s new news reader, Paper, has been generally praised for its design but is in a crowded field. As better mobile services arise for hosting photos and creating events, Facebook will probably try to acquire some of those too.
All of this points to Facebook spending billions of dollars to publicly ponder what would happen if no one regularly used Facebook.com or the core Facebook mobile apps. Mark Zuckerberg does not seem like a chief executive who will settle for dominance and ubiquity in certain fields, as Microsoft has largely done since Bill Gates left in 2000. Zuckerberg wants his company to stay relevant, and remain a meaningful part of people’s lives. Yet Facebook proper has never fully shed its old tagline that it was a “social utility.” If Facebook as a brand can’t escape that utilitarianism, its other brands like Instagram, Paper, and WhatsApp will provide the relevance.
This post-Facebook world has new rules that marketers need to understand:
1) Facebook can still matter even when it doesn’t. Maybe Facebook will thrive as a destination for years to come. But even if it doesn’t – even if the comScore charts on Facebook’s site and branded apps show traffic and engagement falling off a cliff – Facebook can still wind up being one of the world’s most successful businesses.
2) Facebook can survive as a Procter & Gamble or General Motors. Not a fan of the Chevrolet Equinox? That won’t stop you from buying a Corvette. The continued success of Instagram has shown that people are willing to compartmentalize their feelings about Facebook. Someone who has qualms with the social network is still likely to be fine using Instagram. That bodes well for WhatsApp.
3) Old business models may not apply. The best writing about WhatsApp’s business model comes from its CEO Jan Koum on the company’s blog. It’s about as scathing a rebuke to the entire advertising industry as has ever been written, but not as many people were paying attention to Mr. Koum in early 2012 when he wrote it. In the post titled “Why We Don’t Sell Ads,” he wrote, “No one wakes up excited to see more advertising,” and proceeded to call advertising “the insults to your intelligence and the interruption of your train of thought.” Zuckerberg, who can afford to authorize a $19 billion acquisition because of his company’s success in selling advertising, said in the call announcing the deal that Facebook can wait to expand from its hundreds of millions of users to potentially billions of users before figuring out how to make money off of it. That means Facebook is heavily invested in a brand with a business model at odds with its own. Yet somehow, the arrangement makes perfect sense.
4) Other communication apps will fill the ad void. Not all communication app developers are as cynical toward advertising as Mr. Koum. Line, a competitor to WhatsApp, charges for its virtual goods (namely stickers to use in chats), and many of that content is branded. Aviary, which has a photo editing app and powers that functionality in other prominent apps, sells branded content. Others like Snapchat haven’t made it clear which way they’ll turn; the safe bet is they will find someone to make a suitable offer and pass the decision on to the acquiring company.
5) Marketers have never been this fortunate. Consider how many of these mobile properties reach hundreds of millions of users across international borders. It wasn’t long ago when a million users for an app was a big deal; now quite a few have entered the hundred-million user club. As daunting as it may be to initially distinguish a WhatsApp from a Line, the ad-friendly blockbuster apps should have advertisers lining up to take part.
It’s not all rosy. Jan Koum’s success will inspire other ad haters to try other models. But don’t forget who the big dog is in this story. And Mark Zuckerberg isn’t about to bite off the hand that feeds him.