Spencer Ng is a client service associate director at TNS – a global market research firm. He is interested in anything digital and works on TNS Mobile Life – a global study on the mobile consumer. Email him to find out more about the program.
The internet was abuzz with major acquisitions in recent weeks ranging from Viber’s acquisition by Rakuten to the WhatsApp acquisition by Facebook. In particular there has been significant commentary on how the WhatsApp acquisition may create growth for Facebook.
From TNS’ point of view – we know growth comes in different flavors. Take new user acquisition for example: it makes a whole lot of sense for Facebook if WhatsApp users belong to a younger generation, as this segment typically represents active and engaged social media users.Using data from TNS Mobile Life 2013, we will explore three dimensions of acquired growth for WhatsApp and Facebook under this new relationship.
1. Incremental new user growth
The study revealed there is substantial opportunity to create incremental new user growth on top of existing users across Facebook’s properties (Facebook and Instagram). Take Hong Kong for example. 18 percent of WhatsApp users do not use Facebook or Instagram – this represents an opportunity to add WhatsApp’s user-base to the mix of Facebook properties.
A similar story can be told across markets such as Taiwan and Australia. In Europe, an even greater proportion of WhatsApp users can be converted into Facebook users, with Spain (33 percent) leading the charge.
2. Re-engaging the younger set
Another area for potential acquired growth can be gleaned from comparing the audience age composition between WhatsApp and Facebook – one finds a distinctly youthful flavor in the WhatsApp user-base. In Australia, 60 percent of WhatsApp users are 30 years-old and below – substantially younger than Facebook users where only four in ten users are estimated to be below thirty.
3. Keeping Asian chat apps at bay
The WhatsApp-Facebook alliance can help keep the Asian chat apps at bay. WhatsApp may be a way to target users who have not yet been reached by the likes of WeChat. Take Hong Kong for example – 82 percent of WhatsApp users are non WeChat users. In other words, this is a user-base that is not yet accustomed to the chat app as a platform for games, emoticons, and m-commerce.
On the other hand, markets like Taiwan are already dominated by the Line chat app. Only 5 percent of WhatsApp users are not yet reached by Line. Generally, Asia will be a challenging environment given the dominance of homegrown chat apps (China for instance is going to be tough to crack given WeChat’s dominance).
The way forward
If Facebook keeps WhatsApp growing rapidly on one hand and separately optimize Facebook as a monetization platform on the other – they can eventually encourage migration of these highly valuable WhatsApp users onto Facebook. For instance, Facebook can prompt you to invite your WhatsApp contacts to join the mothership.
This way – WhatsApp can focus on growth and Facebook on monetization. Moreover, as a pure growth engine, WhatsApp can remain ad-free. If this materializes, we might be seeing the beginnings of a new business model to manage the trade-off between growth and monetization.
Note: Unless otherwise stated: all data comes from TNS syndicated research Mobile Life 2013. This is a global study on the consumer mobile space and covers 38,000 interviews spanning 43 markets.
(Editing by Terence Lee and Steven Millward; photo credit: Jan Persiel)