Facebook's Whatsapp deal might all be about usability

OK, so Facebook bought Whatsapp for an incredible amount of money. Two reasons have been hypothesized as to the why of that deal: money or data.

Money? The figures do not add. With 450 billion of users paying 1 dollar per year, you're having a very long term goal or sky-high ambitions of increasing the user base.
Data? Sure there is a lot of data involved in Whatsapp. But, seriously, 35$ per user for additional data to use and sell to advertisers? That is a lot of money. Facebook already has a lot of data. They could better spend that money on an army of statisticians and save the other 18.9 billion for another deal.

So, what could be a reason? Usability or, in other words, the attractiveness of Facebook as a sub-internet. Due to its own succes, Facebook has become a massive network crowded with information. The expansion of the social medium called Facebook is gradually reaching a point where you can say that is has become an entire subsystem much like how http once was only a part of "the internet" (next to usenet, FTP, e-mail) but than gradually became a pars pro toto. This is all fine if you are looking at the business figures, but it has a serious drawback for the end user. The stream of information is now so immense that Facebook has to ration the timeline (well, they make money out of it as well, of course, with payed distribution of updates) and that many users finds themselves overwhelmed. This decreases the attractivity for users to spend time on Facebook and it partly explains the unfollowing of friends.

Whatsapp is a perfect solution for that. Integrating it in Facebook will install a sublayer that contains only proximal facebook friends. Indeed, your average contact list on Whatsapp will likely be much smaller than the number of Facebook Friends. It is your closer social inner circle.

Now, imagine a mobile Facebook app layout where Whatsapp is a card within the app. It will contain short status updates of your proximal inner circle. You'll be very interested in that part of the app and engaging a lot with it. Around that info will be your more distant Facebook circle, possibly with brand related posts and Facebook ads for monetization. And you can even imagine regular adds around that one as a third circle. Building the platform as such will ensure a continued interest in the use  of Facebook as a whole, due to the interest in proximal circle of contacts. There are two assumptions here. First, Facebook should try to be the best alternative for both the Whatsapp sub-app and for the overall network experience. Second, people should still be willing to buy smartphones the size of a 7" tablet because a card can only be fitted within an app on such a screen size or larger.
If the above is the way Facebook will integrate Whatsapp, than it is actually a very smart move by Facebook to build there own Google+ based on actual consumer uses. Google+ already has the functionality of different circles, it is closely linked with sharing of pictures and videos (cf. the recent Youtube integration) and it has its messaging/calling application with hangouts. The major drawback of Google+ is that Google built a very strong communication/social platform without consumer usage. I think, Facebook is moving to a very similar platform, but are buying the consumer usage and then make it a platform.

Cashing in on confessions: The Lance interview

Today and tomorrow, the Oprah Winfrey Network will broadcast Oprah's interview with Lance Armstrong. The much hyped and anticipated interview will generate a massive amount of viewers, not only in the US but also worldwide.What an advertising opportunity.
The reach of the interview will surely surpass the reach of the big yearly advertising show called the Super Bowl. On the other hand, Oprah's interview will not result in a useful reach for every advertiser. Not every brand is known worldwide or uses the same brand name, logo and positioning strategy in each country. Another downside is that in contrast to the Super Bowl, advertisers had little time to plan their ads since Oprah did not announce it months before. Still, it seems as if most ad spots have been sold at premium prices (see e.g. Huffington Post).

A journalist asked me to estimate the total ad revenue of this two-part interview. Here is my conservative estimate:
- The inverview will total more than two hours (There is a 1.5 hour show today and another one tomorrow that will at least take 1 hour I guess). Oprah said she did not want to cut the material to a one hour interview because it was too rich (pun added and intended...)
- Assume, conservatively, that there will be 15 minutes of ads per hour, which equals 30 ads in the typical 30 second format.
- Now for the biggest assumption: how much does one ad cost? Super Bowl ads go for about $ 3million each. The most expensive ads in a regular US show are those for Sunday Night Football at an estimated $545,142 (source Adage.com). Given the problems mentioned earlier (short notice to produce targeted ads; possibly not a useful reach worldwide), OWN will not be able to charge at Super Bowl prices. On the other hand, OWN would be stupid to sell at the mere price of sports program (no personal depreciation on my part but the Lance confessions have a much broader audience). If we conservatively assume $750,000 as the minimum price for an ad in Oprah's Next Chapter interview of Lance (probably a serious underestimation)...

... than the total ad revenue should be at least 2,5 x 30 x $.75 million = ~ $56 million.

That is not bad for a network that reports $329 million as their quarterly ad income one year ago (source). And of course, the interview will also generate other income due to it being sold to other stations worldwide. And, in the mid to long term, OWN surely hopes the interview will generate some more audience for other content of the network thus increasing their ad revenue in the long run as well.

I'll be curious to learn about the real revenue if it will be disclosed.

[Note: Edited for a stupid miscalculation]