Why Facebook bought WhatsApp ?

Why did Facebook buy WhatsApp?

I think there’s been a lot of great analysis out there. I think that this was done to keep the focus on Facebook, and away from any competitor. The social network has seen a decline in younger users – the same audience WhatsApp is chock full of – and there’s been speculation that the company is losing its mojo and the appeal of Facebook is dying off. More importantly, Facebook stopped Google from buying WhatsApp – for a rumored $10 billion – again, keeping itself in the headlines instead of Google.

In many ways, WhatsApp users are just the kind of customers Facebook is looking for. They are extremely active, sending more than 600 million photos a. A whopping 70% of WhatsApp users are active every day. By way of comparison, 62% of Facebook users are active daily. People around the world send 19 billion WhatsApp messages per day, including 200 million voice messages and 100 million videos. Crucially, WhatsApp has a strong presence internationally, particularly in Europe, India and Latin America. Those are regions where Facebook is trying to grow its base of users. WhatsApp and other mobile messaging services also are widely used by teens, a group that has notoriously been ditching Facebook for rival services.

"Facebook users were complaining dearly about the lack of one-on-one personalized socializing and sharing, which WhatsApp clearly has been successful with.

How WhatsApp makes money: WhatsApp is also growing at a blinding speed, adding 1 million new users per day. With its $1 annual subscription fee, 1 billion users would translate into significant revenue for Facebook.

"Large scale networks like WhatsApp are rare and provide significant monetization opportunity, justifying their valuation over time. The messaging service, founded in 2009, has been so successful because it understood from the start the importance of embracing mobile technology. That's something Facebook struggled with, notably going public without any revenue from mobile devices. Facebook now gets more than half of its revenue from advertising on smartphones and tablets.

Through WhatsApp, Facebook can see who people are communicating with and how. That information can be used to hone ads on other platforms, this is already in action. Facebook shall implement it through its own or through third party platforms. Facebook shall use data from a user’s WhatsApp profile to predict better ads on his Facebook profile, thus providing better value to the advertiser. Financial Institutions and Hedge Fund Corporations already play with users in this way.