“Amazon buys Goodreads for $150 million”
“Flipkart acquires WeRead”
Some of the biggest acquisitions in the recent years have been of social media sites or apps. Why are companies suddenly interested in social media and willing to shell out good money for it?
Reason #1: Feeling the pulse of the customer
The question can be answered by another question. What do we do before purchasing a book, a cellphone or a laptop? Don’t we Google the reviews? Ask friends on Facebook and Twitter? The answer to the previous question is the same – access to the pulse of the customer.
More and more customers have started relying on word-of-mouth rather than advertisements and banners.
Amazon’s recommendation engine is now powered by the ratings and reviews of Goodreads users, making it much more accurate.
Reason #2: Mobile presence
“Watsapp is on the path to connect 1 billion people. It processes 50 billion messages a day across seven platforms.”
The potential displayed by mobile apps- Watsapp and Snapchat to connect the people in developing countries like India and Mexico has encouraged erstwhile social media companies to jump onto the acquisition bandwagon.
Reason #3: Complimentary Products
Vine – a six- seconds video sharing site was acquired by Twitter since it went hand-in-hand with its philosophy of short and crisp content. Microsoft acquired Yammer to add it to its suite of Enterprise Office tools. Companies are in process of picking up products that will add benefit their existing strategy.
This was my first attempt at understanding the top 3 reasons behind some of the high value social media acquisitions in the recent years. Hope you like it.