It has been a quite the week for WhatsApp after being acquired for $19 billion by Facebook (FB) last Wednesday. Word about the deal has traveled fast. However, the big question that everyone is asking is “could the deal possibly be worth $19 billion?”

WhatsApp founder Jan Koum said at the Mobile World Congress in Barcelona that the company will introduce voice communication capabilities into the product starting in Q2 2014. This has the potential to dramatically enhance the value of the deal. News that WhatsApp will enter the voice communication market not only impacts the industry in a big way, it offers a completely new avenue of revenue generation for Facebook. This announcement comes at a time when the use of data is growing substantially while traditional voice plans are faltering.

On the other hand, if Facebook and WhatsApp fail to execute on the voice connectivity as a new source of revenue then the deal might be in some trouble. Facebook stated that it will not introduce advertising into the app, but let’s unpack that further. First, WhatsApp has huge reach but it doesn’t have a lot of data to be really meaningful for advertisers. In its current design, it doesn’t collect names, ages, genders or addresses. Nor does it store users’ messages. Not a great ad-targeting platform compared to Facebook’s current advertising operations. This leaves little advertising revenue potential if Facebook decided to go the advertising route.

WhatsApp boasts 450 million users (320 million of those being daily active users), and $20M in 2013 revenues. It is growing at 1M new users per day, with a user base that largely complements Facebook’s existing user base. Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook proper.

WhatsApp also has a large international footprint. It started off growing in Europe, India and Latin America. WhatsApp has now grown to be a very important and valuable worldwide communication network. In fact, WhatsApp has a higher percent of people using it daily than Facebook itself.

This we know for sure, when the deal closes, Facebook will own four of the world’s most popular smartphone apps: Facebook itself, Instagram, WhatsApp and Facebook Messenger. They are going to be on the smartphone’s home-screen in multiple ways. This news out of WhatsApp, coupled with any potential integration into the actual Facebook platform for voice connectivity, is significant. Is this a foreshadowing to a future with no need for voice or SMS plans?

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The “Making Sense of Mobile Advertising for SMBs” panel at SMB Digital Marketing 2012 was aptly named, as the mobile needs of small businesses vary widely by category and level of sophistication, among other dynamics. Dick Larkin (VP, American Marketing & Publishing), Mary Beth Brendza (CEO, App Express) and Henry Tam (VP Self-Serve Advertising, Millenial Media) each showcased distinct products that may appeal to different SMBs depending on their position on the adoption curve.

For Larkin, whose American Marketing & Publishing still prints directories in 500 small communities, simplicity is the imperative. His mobile solution is a dead-simple text service that’s as easy as “customer subscribes to a merchant, receives texts from that merchant.” Too rudimentary? Not in rural markets, where mobile adoption is slower and SMBs demand clear technology. The product is sold by print reps at $995 annually, with ample “coaching” built in. The results over the past 14 months: 4100 customers, $3.9 million revenue.

Brendza also believes in simplicity and guidance for SMBs, but with a focus on the app market. App Express is DIFM (not DIY), and at $75-$100 per month, builds out Apple and Android apps, as well as a single-page, HTML-5 mobile websites for resellers’ clients. The obvious question is, “do SMBs really need apps?” Brendza’s answer: the majority of user time on mobile is spent in-app. Moreover, apps provide a deeper level of feature functionality for SMBs, from scheduling to deals and invoicing.

At the far end of the continuum is Millenial Media, the independent mobile ad network colossus that launched a self-serve local ad service to capture SMBs. The platform includes hyper-local geo-targeting that Tam says “can cut across actual neighborhoods.” He showed a map that plotted ad placements for a recent local campaign to prove that precision targeting was indeed precise. The service began with CPC pricing, but will soon add CPM buys for greater simplicity.

While each product falls at a different point on the mobile sophistication curve, a common thread tying all three together is pricing simplicity: flat rates, easy-to-understand bundles and CPMs.

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As BIA/Kelsey’s Mike Boland has detailed, Fanminder‘s mobile coupon platform is notable for both its simplicity of use and economical price, hallmarks that should resonate with SMBs looking to utilize mobile messaging.

Fanminder’s latest release, Fanminder Offers, builds off this strategy to increase SMB accessibility. The Los Altos, California, start-up is primarily using SMS to take advantage of the ubiquity of texting to reach a wider initial audience. With U.S. smartphone penetration hovering between 20 percent and 25 percent and mobile subscribers projected to send 1.6 trillion texts in 2010, this is a logical first step. Mobile apps will launch soon.

While much attention is devoted to prospecting and recruiting new customers, Fanminder specializes in existing customer retention and upsell through mobile couponing. Its platform enables local businesses to build customer lists, then reach out with targeted and timely offers to their opted-in base. Interested users send a uniquely coded reply that allows for full tracking and fraud detection.

A crucial tenet of Fanminder’s growth strategy is building a reseller network that can connect to more SMBs. CEO Paul Rosenfeld recently told BIA/Kelsey that a partnership with Intuit to power a “Text2Vote” campaign achieved this goal.

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Carey Bunks (group VP of mobile, European Directories), Mathias Schroeder (cofounder, Adaffix), Matt Myers (CMO, Shooger) and Ivan Braiker (CEO, Hipcricket) each offer distinct advertising products for SMBs in the mobile space. They are united, however, by a shared enthusiasm for mobile’s mushrooming growth and potential profitability … a sentiment that was evident in their panel discussion on mobile revenue opportunities at DMS ’10.

Bunks highlighted several tiered products that European Directories is implementing. Opt-out bundles are already in place, with premium product rankings in mobile search and click-to-call packages due out shortly. Product innovation is spurred on by mobile’s unrelenting growth, which Bunks predicts to be somewhere between “50 [percent] and 100 percent” of online usage by 2013. 

Schroeder specifically works with mobile calls, defining them as “intentions” that must be monetized (think Google) by getting leads on the screen of a consumer’s phone. For European-based Adaffix, that means appending “relevant” social and local content to calls. This takes a few primary forms, including adding contact information to incoming calls from unidentified numbers and providing alternate business listings if call “intentions” are unsuccessful (a busy signal when ordering a pizza or an unanswered call when scheduling an appointment).

Myers trumpeted mobile for its variety of platforms (SMS, Web, apps) and location-aware capabilities that can increase ROI for advertisers. Tied to these intrinsic benefits, he noted that the onus is on developers to create offerings that are flexible yet simple, affording greater accountability (tracking, transparency) while also being strong on service (sales training, best practices). Shooger aims to integrate all of the above through a deals hub that connects merchants to consumers across the full range of mobile platforms.

Braiker’s do-it-all Hipcricket (mobile applications, couponing, text advertising) has seen text messaging volume skyrocket and actions related to location-based ads increase. This bodes well for mobile monetization as higher CTRs and other metrics that outstrip online can serve to drive up ad rates.

As Myers said, ROI is the “normalizing factor” that will justify a greater mobile spend by advertisers.

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National retailers are increasingly looking to get their local stores into local Web sites, directories and social and mobile sites. But they are confronting issues such as bad local store listing data, and the challenge of competing with locally owned stores for social and mobile media awareness, according to a morning panel hosted by Red Door Interactive at its San Diego headquarters.

Members of the panel included ESET VP Dan Clark; Universal Business Listings CEO Doyal Bryant; Citysearch National Sales Manager Michael Todd; and Placecast Chief Revenue Officer Jeff Montgomery.

For national retailers, “the biggest competitor is a locally owned shop,” notes Placecast’s Montgomery. “Digital Physical” efforts attached to consumer wallets are the way to go.

Because of that, the natural goal for chains like Target is to zero in on what makes the local Target outlet “My Target. Relevancy is tied to where you are,” says Montgomery. In fact, it is “not just where you are, but the time of day. It means something if it is 8:30 on a Saturday night.”

Montgomery suggests that retailers begin to go beyond “no brainer” Web site features such as store locators and product info and start digging in with video, mobile and SMS. “Mobile Web sites are obviously something you need to do in the future,” he says. But in conversations with more than 160 agencies and brands, Placecast has learned that the bug question is: “What do I do in mobile?”

“The objective is to learn as quickly as possible,” says Montgomery. “Don’t just look at clicks. They don’t capture a user’s emotional connections.”

Montgomery suggests that retailers start with short codes and keywords, which have a similar impact as more sophisticated bar codes and scanable coupons, even if they don’t  exactly provide “the same rich experience.” What retailers will find is that SMS is “incredibly affordable. You can build that asset right out of the gate,” he says. They’ll also see very high open rates in e-mail from smartphone users. The mobile open rate is 82 percent, and 69 percent open immediately.

The Panel at Red Door Interactive

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National retailers are increasingly looking to get their local stores into local Web sites, directories and social and mobile sites. But they are confronting issues such as bad local store listing data, and the challenge of competing with locally owned stores for social and mobile media awareness, according to a morning panel hosted by Red Door Interactive at its San Diego headquarters.

Members of the panel included ESET VP Dan Clark; Universal Business Listings CEO Doyal Bryant; Citysearch National Sales Manager Michael Todd; and Placecast Chief Revenue Officer Jeff Montgomery.

For national retailers, “the biggest competitor is a locally owned shop,” notes Placecast’s Montgomery. “Digital Physical” efforts attached to consumer wallets are the way to go.

Because of that, the natural goal for chains like Target is to zero in on what makes the local Target outlet “My Target. Relevancy is tied to where you are,” says Montgomery. In fact, it is “not just where you are, but the time of day. It means something if it is 8:30 on a Saturday night.”

Montgomery suggests that retailers begin to go beyond “no brainer” Web site features such as store locators and product info and start digging in with video, mobile and SMS. “Mobile Web sites are obviously something you need to do in the future,” he says. But in conversations with more than 160 agencies and brands, Placecast has learned that the bug question is: “What do I do in mobile?”

“The objective is to learn as quickly as possible,” says Montgomery. “Don’t just look at clicks. They don’t capture a user’s emotional connections.”

Montgomery suggests that retailers start with short codes and keywords, which have a similar impact as more sophisticated bar codes and scanable coupons, even if they don’t exactly provide “the same rich experience.” What retailers will find is that SMS is “incredibly affordable. You can build that asset right out of the gate,” he says. They’ll also see very high open rates in e-mail from smartphone users. The mobile open rate is 82 percent, and 69 percent open immediately.

The Panel at Red Door Interactive

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Lisa Bishop at Gray Television took a few contrarian views when discussing mobile strategies, during an afternoon DSB session on “New Ad Revenues for New Times.” Taking issue with the app craze we’ve seen dominating the media world over the past two years, she’s seeing better engagement and returns with SMS and WAP strategies.

“WAP is more widely available to a larger consumer base,” she said. “The iPhone makes up 2 [percent] to 4 percent of devices and our developers were spending 80 [percent] to 90 percent of time reaching this smaller share of end users.”

This flies in the face of News Over Wireless’ Sam Matheny’s point yesterday about greater growth and rich media capabilities of iPhone apps. There is also the argument that what the iPhone lacks in device share, it makes up for in engagement share, holding the vast majority of mobile Web traffic in the U.S.

The mobile products and features that Gray has focused on include WAP sites for each of its stations and SMS alert service for weather, news and sports alerts (monetized with sponsored messages). Next up are coupons, local search functionality (working with Local.com) and social sharing features.

Also somewhat of a contrarian take from Gray was its recent decision to go it alone when it came to building and managing its WAP product. This was a risk at first because it lost on-deck traffic it previously enjoyed by virtue of the carrier relationships held by the vendors it worked with.

But given more smartphones in the market, Bishop argues there are more users going off deck to search the mobile Web, thus mitigating this lost traffic. Bringing the platform in-house has also allowed Gray to have better control over the dynamic nature of its content, site design, ad serving and perhaps most of all, cost.

“Selling mobile [advertising] was difficult because costs were so high,” said Bishop. “We were selling $20 to$25 CPMs for our WAP sites. But we’ve been able to lower that and see greater returns.”

The results speak for themselves: Gray has cut mobile costs by $0.5 million and increased revenues by 90 percent over the past year. With SMS, it has seen a 20 percent increase in sponsored alerts and has run 130 SMS campaigns in the past month alone — more than it did all of last year.

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The dial continues to be turned up on location based mobile marketing. While usage evolves and creates monetization opportunities, advertiser interest grows from secular and cyclical shifts. The latter will continue to improve as we emerge from recession.

As for location targeting, not only does proximity correlate to purchase intent (compared with desktop browsing), but a mobile Web and apps ecosystem proliferates through smartphone penetration. Netbooks, eReaders and iPads could bring this to another level.

But until that happens, the most prevalent form of mobile engagement continues to be SMS. It’s second nature for a lot of people (see Nielsen figures) and continues to assimilate through major cultural phenomena and events (“American Idol,” Haiti relief).

Building Hot Spots

Sonoma, California-based Convergent Mobile has built an SMS marketing and promotions engine on this idea. It has secured the valuable short code US411 and gives small businesses a keyword of their choice. This term becomes branded to the business and joins its marketing in print, radio or onsite (think menu inserts, or window signs).

Users who text the keyword to US411 will receive SMS info and promotions as well as links to an SMB landing page that Convergent hosts and provides the tools to build (example below). Businesses pay $20 to secure a keyword, then a $10 monthly flat fee. This comes with a dashboard to create and modify promotions on the fly.

The company is in the process of signing on channel partners such as Yellow Pages companies and local search pure plays, in order to scale its advertiser reach. Publisher benefits include mobile calls to action in print listings — both a brand PR move and a retention tool for increasingly results-oriented advertisers.

Next steps include beefing up content and coupons. This will require a separate mobile coupons provider, says President and Director Mickey Breen. Meanwhile, it already pulls in Yelp’s API and lets businesses decide if they want their Yelp star rating showcased on their mobile landing page.

Going Deeper

Ties with a company like Yelp could also make sense to build deeper physical integration with SMB locations. This is something Yelp has separately shown interest in (window decals, etc.). It’s also pushing toward more dashboard tools for SMBs to have control over their marketing (not to mention a growing mobile focus).

Self-serve SMS account management would also seem to plug into Google’s general strategy to broaden AdWords offerings. We heard from Google’s Surojit Chatterjee at our ILM conference about how it has integrated checkbox-like simplicity for advertisers to “add mobile”. AdMob broadens that capability, and SMS tools could do similar.

Breen believes the US411 short code and the simple dashboard are what differentiate Convergent. He also boasts competitive pricing. Annualized at $140, he claims its fees undercut most competitors by a few hundred dollars.

All in all, the company has the ingredients, but will have to prove itself through distribution deals and channel partnerships (or acquisition) to scale its reach to SMB advertisers.

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