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A lot of people wondered why Facebook paid so much money for WhatsApp.

WhatsApp is 100% social, and you don’t have companies in your phone book. Many companies and online services would love to send you messages in your WhatsApp box while it’s free messaging. But they can’t.

What if customers could drop their mobile number at any online site or mobile app via their Facebook login and stay in control over the permission they gave you as a service?

Customers can even withdraw their permission before you even send a message. This is my take on what Facebook could do.

The mobile communication conundrum between companies and customers

We all hate spam in our text/sms message box. That's why we are hesitant to hand over our mobile phone number to companies for receiving 'relevant' SMS messages.

And when we give permission to companies to send us a text message, we are not in control to manage that permission. Ever tried to opt-out of a text message?

Companies who send me the text messages currently pay $0.005 cent per message in the US but outside the US even $0.05 per message to SMS service providers.

An expensive communication channel, difficult to manage and to track and more importantly, not customer friendly (replying costs money). And than we are not even talking about multimedia messaging (MMS) which is the biggest fail in the mobile world.

The solution Facebook and WhatsApp can offer

Facebook offers a login box to drop your phone number at any website or online service. You will be able to simply login with your Facebook account and give the website permission to send you a message on WhatsApp.

You can also define, how many messages and within what timeframe and even what type of messages.

No Facebook or WhatsApp account? Just enter your phone number, set the permission settings and Facebook sends you a download SMS for WhatsApp with password in case you don’t want to use WhatsApp.

After installing and registering WhatsApp, you will be recognized and don’t have to re-enter the permission. No installation? Facebook will deliver the message in the form of an SMS.

The website or online service you gave permission can now for example only send you one pre-defined message and will never know who received it. You’ll stay anonymous because Facebook delivers it. Not the company you gave permission.

As a user you can click in the permission dashboard or click on the senders profile to change your permission settings (increase it or decrease it). When you don’t want to use WhatsApp, you’ll receive a text message.

Revenue and user generator

Companies will pay Facebook $0.005 cent per message and Facebook wins a potential new WhatsApp / Facebook user and in case it will be an SMS they can charge an amount which will always be cheaper than the current SMS price because of their volume.

According to Portio Research there were 3.2bn global subscribers to SMS Marketing. When Facebook increases this market by building thrust and give user control over their permissions it can result into 200 messages per year per user.

And with $0.005 a message this can result into $3.2bn a year in revenue! That’s a good return on investment and puts Facebook in a stronger position to further claim the world of permission marketing.

Of course Facebook could start this service also without WhatsApp but they don’t have a messaging platform which has that many users and is experienced the same as the SMS inbox.

The important question of course remains: Will people trust Facebook for this? 

Time will tell…

King Yiu Chu

Published 24 February, 2014 by King Yiu Chu

King Yiu Chu is AR Strategist at Layar and a contributor to  Econsultancy. You can follow him on Twitter or connect via LinkedIn

1 more post from this author

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Barry

It looks like Facebook and Google are both going for world dominance. Sounds like Facebook are buying users and the revenue which they will generate from that. Plus Google don't really have much mobile specific data. This will provide them with even more data. I do like to keep my Facebook friends different to my Whatsapp list. I think they can be 2 very different groups.

about 2 years ago

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Syed Qasim

What i think WhatsApp invested a good amount of money on facebook to get more users. Obviously they might have good plans for future.

about 2 years ago

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Shradha Bhatia

Great post! I think buying WhatsApp was a good strategic move for Facebook, given that the usage has been falling month after month, especially with the younger age group.

If you love unique digital marketing campaigns, check out my latest post about Coca Cola's Invisible Vending Machine campaign. You will find it very interesting. It would be great if you could drop a comment with your thoughts on the same.

Keep the great content coming!

Shradha Bhatia

about 2 years ago

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Saiqa Bi

Leveraging whats app to potentially engage in mobile marketing would surely go against the premise of whats app? You can read a whats app blog article titled "why we don't sell ads" with the strap line "Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need – Tyler Durden, Fight Club"

Watch this space I guess ....

about 2 years ago

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Alex Mason

Plus now, Facebook not only knows who in the world are acquainted, but also who out of those people actually communicate to one another. They can delve deeper than just facebook friends, into actual real life "let's go to the pub" friends.

about 2 years ago

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Alex Smith, Manager at the openion

Because whatsapp has started getting more user than Face Book, and this is the best way to finish the competition. More over its very easy to download WhatsApp for pc now, http://whatsapppconline.com

over 1 year ago

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