With WhatsApp, Facebook gets a younger, mobile face in India:

 

 

Mumbai: Facebook Inc.’s decision to buy messaging app WhatsApp Inc. for $19 billion makes a lot of sense for the social network company in India, where most online users are young and access the Internet mainly through their mobile phones.

These are the strengths that WhatsApp brings to the table with its estimated 30-35 million purely mobile users in India that will now be coupled with the more than 100 million users of Facebook, of which an estimated 40% access social network on mobile devices.

As of 31 December, Facebook had 93 million users in India who accessed the world’s largest social networking site at least once a month and 31 million mobile users who visited the site daily, according to the numbers provided during company’s December quarter results.

Globally, Facebook had 757 million daily active users on average as of 31 December while 945 million users visited the site at least once a month on their mobiles as of the same date. WhatsApp claims to have 450 million users globally.

 

Mobile is the way forward and chat is now integral to smartphone usage, analysts say. According to research firm Forrester, 69% of global information workers use texting (SMS or a service such as Apple Inc.’s iMessage or WhatsApp) on a smartphone for work.

Moreover, according to a November 2013 report by Nielsen Informate Mobile Insights, even as six out the top 10 applications used by a smartphone owner were Google Inc. brands, it was WhatsApp that ranked No. 1.

The Nielsen report, which also said that three out of every four smartphone owners use a chat app, pointed out that in India, WhatsApp leads the pack of top apps with a 76% reach; Facebook is in fifth place with a 52% reach, Hangouts in ninth with a 25% reach, and Chinese app WeChat in 10th place, with a 22% reach.

Last year saw a number of chat app brands being introduced in India including WeChat, LINE and even the BlackBerry messenger for Google’s Android mobile operating system—many of these with additional features like voice chat.

 

“Our data shows that the new players still have a long way to go. The early mover advantage seems to have worked for WhatsApp and it leads the category both on penetration and engagement,” the Nielsen report said.

Competition is tough in the market for chat apps.

WhatsApp’s rivals, both globally and in India, include Chinese company Tencent Holdings Ltd’s WeChat (known as Weixin in Mandarin) that claims 270 million active users, and Japan’s LINE that recently crossed the 300 million registered account mark (not all are active users). Other apps include Viber, Kik and ChatON.

WhatsApp is a free download, but the service will cost a nominal $0.99 per user per year after the first year of use. WhatsApp in India is also available on feature phones such as the Nokia Corp.’s Asha line.

WeChat does not share India numbers, but maintains that India is its second largest market. It dominates in China, where WhatsApp has not been able to make much of a dent.

 

Tencent is working its market-leading mobile platform into every aspect of daily Chinese life—from shopping online to ordering food and drinks, including from a vending machine, or sending Lunar New Year gifts. Users can also invest or book doctor appointments through WeChat accounts.

The company is also making a big push outside of China, with a $200 million ad campaign across India, South Africa, Spain and Italy.

Changing things

And it is not slowing down. On 16 January, it announced updates to WeChat Games that allows users to discover new addictive games, share scores, post their achievements and compete with their fellow WeChatters.

It also unveiled a partnership with AskMe, which has opened an official account on WeChat, where users can get easy access to searches, deals and classifieds at their respective locations while remaining within WeChat. The games are also enabled with location-based service.

Social media marketing experts maintain that the Facebook-WhatsApp combination may change things soon.

 

“Around 70-75% of WhatsApp people come back daily, giving it the highest rate of return on daily usage. Facebook has a return of 60-65% so the combination makes a lot of sense,” said Adhvith Dhuddu, founder and chief executive officer (CEO) at AliveNow, a Bangalore-based social marketing firm.

He pointed out that WhatsApp does have an “unstructured way of dealing with ads and branding”.

“Clients have begun updating their FB pages and users of these pages are being asked to cut-paste the messages within these pages on their WhatsApp numbers for discounts on goods, etc.,” said Dhuddu.

Of the digital ad spending of about Rs.3,000 crore, Google SEM (search engine marketing) accounts for nearly 50%, and the rest is taken up by display and panel ads in social networking sites such as Facebook, said Hareesh Tibrewala, joint CEO of digital marketing firm Social Wavelength.

“With this deal with Facebook, WhatsApp, which has been so far been focusing on products and expanding its user base, will start monetizing the site, too,” he said.

WhatsApp, according to Bhaskar Anand, founding CEO and managing director of digital advertising firm MavenClickZ, has attracted a majority of the young people who are already hooked to Facebook via smartphones.

 

“FB will integrate the WhatsApp feature in the FB web platform and adding almost another one billion users of WhatsApp. As the mobile inventory is bound to grow, it will increase the ad revenue share of Facebook that can push the ads to users of smartphones, based on their browsing history,” he added.

Facebook users have been complaining about the lack of one-on-one, personalized socializing and sharing, which WhatsApp has been successful with, said Vidya S. Nath, director, digital media, Global Innovation Center (GIC), Frost and Sullivan.

“Further, with an international subscription base, WhatsApp lends an edge to Facebook’s network. Facebook didn’t win brownie points with its mobile platform; its user interface was not fully optimized for phone users and its business requirement to include advertising as part of it diluted the user experience. On the other hand, WhatsApp took chatting to another level, and it further strengthened the phone as a central point of a consumer’s universe,” said Nath.

 

But why do these chat apps love the India market?

Simply put, India is set to become the third largest market for smartphones in four years, according to technology research firm International Data Corp. (IDC), with phone makers launching more affordable 3G handsets and looking to tap buyers in small cities and towns.

 

Name: Gauri Kesarwani.

PGDM- 2nd (sem)

Source: Live mint

Date: feb- 21, 2014