Dissecting Facebook and Its Viral Acquisition Strategy

Facebook and Its acquisition strategy

With existing services such as Facebook Home (a user interface layer for Android compatible smart phones), Facebook Paper (a phone based equivalent of a newspaper or magazine for iOS devices) and Friend Feed (a feed aggregator that consolidates updates across social platforms), Facebook’s intent to capture a large chunk of the $137.5bn worth mobile advertising market is no hidden fact.

Even though they encountered an unsuccessful attempt to buy over Snapchat, by adding the 19bn worth WhatsApp Messenger and not to mention Instagram to its kitty, Facebook has taken a giant step towards capturing eyeballs and personal data of those accessing services from handheld devices.

According to me, some of the clear takeaways from this acquisition spree are:

Facebook absorbs young & knowledgeable teams as it is profitable for them to acquire rather than build.

For Facebook, the worth of the company is not determined by its current ability to monetize or the round of funding they have managed to raise from their investors. The deal breaking criterion is the promise and enthusiasm a new team brings to the table. With this philosophy they have managed to cross one of the biggest bottlenecks of growth for a business – finding the right people who believe in their idea.

The viral acquisition strategy adopted by Facebook is aggressive to say the least and extremely well planned. Their ploy has been to back smart people with capital and further build on the momentum. When Facebook acquires a team, size doesn’t matter. What matters is the uniqueness and potential of the idea and the sound creative and technological know how that the new team gets on board.

Little Eye Labs is Facebook’s first acquisition of an Indian company. An Indian start-up that builds mobile app analysis tools will help Facebook further improve its Android code base and make more efficient performance measurement and analysis of apps.

Apart from the above, Facebook aims to internalize by taking teams and twisting concepts to suit them.

Through this, Facebook gets a chance to study various activities in the mobile space and not to mention – builds a knowledge base and uses that to target ads better.

Like any acquiring company, Facebook tries to internalise the concept of the company absorbed, however only for the better. For instance, Instagram took steps towards monetization by selling paid images, Whatsapp announced the addition of phone calls post acquisition and Branch and its team of 9 professionals once acquired by Facebook went on to form ‘Conversations.’ This means that all future Facebook products in the messaging and discussion space could be a reminiscent of Branch. These additions ultimately have been beneficial for the company. Take Facebook’s latest acquisition for example, the Moves app, runs in the background of the user’s phone and keeps track of his location and daily activities. By tracking these interests and habits Facebook looks to gather insights in the long run which will help target Facebook ads better. As of today this free app has over 4mn subscribers and works well on both iPhone and Android phones. With this acquisition, the Moves app is set to take on Fitbit and Nike which own apps in a similar space.

Facebook also ensures great ideas come in the forefront

With one eye on the mobile and tablet interfaces, Facebook is also eager to keep pace with the platforms that would come next; something that would make lives of users more entertaining, personal and useful. That is where the tie-up with Oculous fits in. With Facebook backing the Oculous Rift headset team, it is set to revolutionise the world of gaming. And not before long, this technology will revolutionise the way we interact digitally too.

As Facebook acquires all hot properties which could turn potential rivals, it is also working towards bettering its news feed algorithm and features. For instance Facebook has come down strongly on posts which are over aggressive on CTAs and spammers. Another interesting feature introduced is an ability to be notified when you are close to your friends. A user can opt in to the ‘Near By Friends’ feature and track whereabouts of friends even when the app is not in use.

An extremely impressive takeaway is Facebook’s ability to consolidate on its share in the market and give Google a fight. This policy ensures that Facebook never loses out to competition. Even before the competition is large enough to be a threat it is already acquired by the social media giant.

According to forecasts, Facebook is set to capture an even bigger slice of the mobile and digital advertising market this year, trailing only to Google. With its high stock price and healthy price-earnings ratio, it is in a commanding position to continue its shopping spree and acquire more standalone mobile apps in the near future.