• Marketing Land
  • Sections
    • CMO
    • Social
    • SEM
    • SEO
    • Analytics
    • Display
    • Retail
    • MarTech
    • Resources
    • More
    • Home
  • Follow Us
    • Follow
  • Marketing Land
  • CMO
  • Social
  • SEM
  • SEO
  • Analytics
  • Display
  • Retail
  • MarTech
  • Resources
  • More
    • Follow
  • SUBSCRIBE

Marketing Land

Marketing Land
  • CMO
  • Social
  • SEM
  • SEO
  • Analytics
  • Display
  • Retail
  • MarTech
  • Resources
  • More
  • Home
  • Newsletters
  • Home
Social Media Marketing

Shrewd Or Desperate: Facebook To Buy WhatsApp For $19B In Cash And Stock

It’s mostly a stock transaction: $12 billion in Facebook shares and $3 billion more to retain WhatsApp employees over four years after closing. (It will cost Facebook only $2 billion if the deal doesn’t go through). Beyond this, WhatsApp founder/CEO Jan Koum and his fellow workers will get an additional $4 billion in cash up front. […]

Greg Sterling on February 19, 2014 at 6:32 pm
  • More

WhatsAppIt’s mostly a stock transaction: $12 billion in Facebook shares and $3 billion more to retain WhatsApp employees over four years after closing. (It will cost Facebook only $2 billion if the deal doesn’t go through). Beyond this, WhatsApp founder/CEO Jan Koum and his fellow workers will get an additional $4 billion in cash up front.

That’s roughly how much it was rumored that Facebook (and Google) unsuccessfully offered for Snapchat a few weeks ago. By comparison Facebook bought Instagram for about $1 billion. That seemed like a premium way back in 2012. Now it seems like lunch money by comparison.

Beyond WhatsApp advancing Facebook’s mission of making the world “more open and connected,” here are some of the numbers and motivations behind the deal:

  • WhatsApp could have become a major competitive threat to Facebook over time
  • The company is one of the fastest growing in startup history
  • It has 450 million active users globally; it’s bigger than Twitter
  • It replaces SMS and may ultimately steal messaging volume and revenue from global wireless carriers
  • The company hasn’t spent any money on marketing and yet it has seen remarkable viral growth
  • It costs $1 per-user, per-year (so there’s already a lot of revenue)
  • The team is relatively small, under 50 employees

Nothing is supposed to change at WhatsApp. Facebook says it will take a hands-off approach to managing the company. What’s interesting is: with this acquisition, Instagram, Facebook Messenger, Paper and potentially other “stand-alone” apps in the works Facebook is becoming the Proctor & Gamble of social media.

WhatsApp’s Koum and crew don’t like ads (hence the $1 fee). That may become a problem down the line as Facebook inevitably seeks to justify its purchase and further monetize the WhatsApp user base.

Facebook is down slightly in after-hours trading. It’s unclear how the market will react to this transaction: a shrewd buy or a desperate move to buy up a competitor and address its “youth problem”? Some people are calling the acquisition an admission of the latter.

But wasn’t Instagram supposed to solve that problem?

It’s an amazing bubblicious purchase price. And it’s also quite possible that in 2015 or 2016 another social media startup (“the next Twitter or Facebook”) will be experiencing similar, massive growth. Is each year thus going to see another multi-billion-dollar social media acquisition?

Probably.


Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.



About The Author

Greg Sterling
Greg Sterling is a Contributing Editor to Search Engine Land, a member of the programming team for SMX events and the VP, Market Insights at Uberall.

Related Topics

Channel: Social Media MarketingChat & Text Messaging AppsFacebookFacebook: AcquisitionsFacebook: Business IssuesSocial Media Marketing

We're listening.

Have something to say about this article? Share it with us on Facebook, Twitter or our LinkedIn Group.

Get the daily newsletter digital marketers rely on.
See terms.

ATTEND OUR EVENTS

MarTech 2021: March 16-17

MarTech 2021: Sept. 14-15

MarTech 2020: Watch On-Demand

×

Attend MarTech - Click Here


Learn More About Our MarTech Events

February 23, 2021: SMX Report

April 13, 2021: SMX Create

May 18-19, 2021: SMX London

June 8-9, 2021: SMX Paris

June 15-16, 2021: SMX Advanced

August 17, 2021: SMX Convert

November 9-10, 2021: SMX Next

October 2021: SMX Advanced Europe

December17, 2021: SMX Code

Available On-Demand: SMX

×


Learn More About Our SMX Events

White Papers

  • The State of Local Marketing Report 2020-2021
  • Quality CRM Data: The Key to Delivering Great Customer Experiences
  • How the Microsoft Search Network Can Maximize Your Search Campaigns
  • The Marketer’s Playbook for Customer Acquisition
  • How To Optimize SEO With UGC
See More Whitepapers

Webinars

  • How to Avoid the Digital Transformation Trap
  • How to Build a Marketing System of Record
  • Meet BIMI: The brand-boosting email security marketers must have for 2021
See More Webinars

Research Reports

  • Local Marketing Solutions for Multi-Location Businesses
  • Enterprise Digital Asset Management Platforms
  • Identity Resolution Platforms
  • Customer Data Platforms
  • B2B Marketing Automation Platforms
  • Call Analytics Platforms
See More Research

h
Receive daily marketing news & analysis.
Marketing Land
Download the Marketing Land app on iTunes Download the Marketing Land App on Google Play

Channels

  • MarTech
  • CMO
  • Social
  • SEM
  • SEO
  • Mobile
  • Analytics
  • Retail
  • Display

Our Events

  • MarTech
  • SMX

Resources

  • White Papers
  • Research
  • Webinars
  • MarTech Conference
  • Search Marketing Expo

About

  • About Us
  • Contact
  • Privacy
  • Marketing Opportunities
  • Staff
  • Connect With Us

Follow Us

  • Facebook
  • Twitter
  • LinkedIn
  • Newsletters
  • Instagram
  • RSS
  • Youtube
  • iOS App
  • Google Play

© 2021 Third Door Media, Inc. All rights reserved.

Your privacy means the world to us. We share your personal information only when you give us explicit permission to do so, and confirm we have your permission each time. Learn more by viewing our privacy policy.Ok