Why Facebook Buying Waze for $1 Billion Makes Complete Sense
By: Hillel Fuld (@hilzfuld)
As of now, these are just rumors but rumors from pretty credible sources. The latest report comes from TheNextWeb, which quotes Calcalist that Facebook is in the final stages of negotiations to buy Waze for $1 billion. Why would a social networking site buy a navigation app, is what many people are asking. Those people don't get Facebook, or what Zuckerberg has in store for all of us.
As we recently wrote, Facebook stopped being a web-based social network a long time ago and its recent earnings are proof. Facebook is a mobile advertising company and the social networking aspect is simply a mask intended to hide the entire concept on which Facebook is based. In two words, data collection. But data collection is not the goal, it is the means. The goal is to bring hyper local mobile advertising to a whole new level.
Now, can you think of any company that has in depth data about its users' location based on social collaboration and old-fashioned crowd sourcing? Anyone? Anyone? Bueller? Bueller?
Waze is a perfect fit for Facebook and it is so obvious, I am surprised it took this long. Now again, rumors, but even if it does not come to fruition, that is only because the price wasn't high enough or Zuckerberg was not smart enough. This is an acquisition Facebook should make. So should Apple. And you know what? So should Google. In fact, maybe that is why there is such a high price tag, because the demand is indeed very high and there is only one Waze.
The main gain here in the long run is for Facebook, and to be honest, if all goes according to plan, Facebook users. How do I figure? If Facebook buys Waze, it will kill the app and integrate it into its platform. It will then use the data to target us with relevant and useful ads. Now, before you faint at that thought, think about it. You are walking by your local supermarket and Facebook knows that, and sends you an "ad" telling you that if you go shopping now, you can get 20% off. Or a free coffee. Or a discount on those jeans you wanted. Or or or...
The point is, advertising has become a dirty word on mobile but that is because it was stuck in the 80s with banner ads that are irrelevant to the user and quite frankly, 9 out of 10 times, ugly and annoying. But if Facebook changes the game with engaging and rich media ads that are actually relevant and helpful to users by using Waze's location information and crowdsourcing expertise, the sky is the limit to what mobile advertising can do to enhance our lives.
As a Waze user, this news kind of makes me sad but as a general consumer, this excites me. As a mobile monetization company, I think we can all agree that "we told you so.".