The Local On-Demand Economy (LODE) will be all about transactions. The ease of transaction between buyer and seller will need to match the lowered-barriers and “immediacy” of the on-demand service and experience itself. Otherwise, LODE’s promise won’t be fulfilled. It’s all about the money.

Fortunately, lowered barriers is exactly the trend we’re seeing in payments, starting years ago with Paypal and extending to today with things like P2P transactions (Square Cash) and enterprise/ecommerce (Stripe). There’s also payment giants like MasterCard innovating for a LODE-centric world.

We held a webcast last week to discuss where this is all going. Led by BIA/Kelsey analyst Mitch Ratcliffe, the conversation included MasterCard and Flint Mobile. They both had lots to say about payments’ importance at the center of the LODE equation — not just the why, but also the how.

See the full webinar replay embedded below.

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Flint will be speaking at BIA/Kelsey NOW: Rise of the Local On-Demand Economy next Friday in San Francisco. Register here (Inside tip: Save $100 by using the discount code “MB100″).

The post Payment Systems Will Be the Backbone of the On-Demand Economy (Video) appeared first on BIA/Kelsey - Local Media Watch.

In case you haven’t heard, Facebook just announced it will acquire mobile messaging company WhatsApp for $19 billion. And just like that, we have the largest venture backed acquisition in history (Sequioa alone pockets ~$3B), and the largest tech acquisition since HP/Compaq.

The news already has a few haters. Facebook stock is down about 5 percent at the time of this writing, due presumably to unease in a clear monetization plan, and some stock dilution from the equity portion of the deal. You can also expect to hear the word “bubble” many times this week.

There’s of course a lot to it, and I’ll leave the valuation angle to colleagues that wear that hat. From a tech and media perspective, it’s clear that messaging is now table stakes for companies building mobile products. Apple has iMessage, Google has Hangouts, and so on.

Facebook already has Messenger but it’s been pretty benign. So accelerating its moves into messaging can only happen through acquisition. There are also natural synergies between mobile messaging and a company that owns social connections, identity and a built-in network effect.

WhatsApp meanwhile was getting too big to ignore. Its messaging volume approaches the entire global telecom SMS market with 19 billion messages sent per day and 34 billion received (imbalance is due to group messaging). It also sends 900 million photos, voice & videos per day.

So it was a competitive threat if not bought, and a potential asset if bought (sound familiar?). Facebook has 550 million mobile active users, and WhatsApp already has 450 million. More importantly, those are mostly non-overlapping overseas users where Facebook’s growth plans lie.

As for the monetization question, there are a few ways to think about that. Mark Zuckerberg stated on the analyst call that they won’t monetize the app through ad support (it currently charges subscription in some countries). And they won’t integrate it with Facebook proper anytime soon.

But in the absence of ads or direct monetization, WhatsApp could be an effective loss leader to grow Facebook’s global user base. User acquisition is vital for a company like Facebook for which there’s a lock-in effect and a high lifetime customer value.

Monetization can then come in all of the other ways Facebook is building its revenue model. In that light WhatsApp can be seen as a play at sheer scale. And that needs to happen globally, where Facebook’s user base will underpin its network effect and all future plans as a business.

So was it worth $12B in cash and $7B in equity and earn outs? Probably not. But it’s not necessarily about how much WhatsApp is worth, but what’s it worth to Facebook? This comes back to Mark Zuckerberg’s apparent vision of buttressing Facebook’s growth with a messaging platform.

Tech valuations these days are less about traditional metrics like revenue multiples and ARPU. We’re seeing more weight put on another longstanding valuation metric: projected future cash flows. The challenge there is that it’s mired in intangibles for lots of tech companies.

In other words, Mark Zuckerberg’s projection is different than yours. And this discussion isn’t complete without SnapChat.  Zuckerberg is clearly intent on owning messaging — including ephemeral messaging — if you consider the anemic launch of Poke and a failed $3B Snapchat acquisition.

WhatsApp now puts Facebook in the position to do what it failed to do in these earlier attempts. It can integrate ephemeral messaging at a scale well beyond SnapChat’s reach.  This is clearly a vital part (at seemingly any cost) of Zuckerberg’s vision to maintain dominance of the social graph.

More soon from colleagues on the valuation side. In the meantime just for fun, here’s a list of things that are equal in value to WhatsApp’s price tag, as assembled by TechCrunch. I’ll add to their list, 19 billion packs of baseball cards and 62 million leprechauns.

$19 billion is…

— 4x the market cap of BlackBerry
— Approximately one-third the market cap of Ford
— 2.8x the market cap of GroupOn
— Effectively equal to the market cap of The Gap
— Slightly more than Sony’s market cap (around 10 percent)
— Around three-fourths the market cap of Delta
— 7.5 Mark Cubans
— Almost precisely one-third of HP’s market cap
— 2 nuclear submarines
— 62 percent of Twitter’s market cap
— 76,000 trips to space on Virgin Galactic
— Almost 60 percent of Sprint’s market cap
— 25 Instagram acquisitions

The post What’s App with $19B Acquisitions These Days? appeared first on BIA/Kelsey - Local Media Watch.

In case you haven’t heard, Facebook just announced it will acquire mobile messaging company WhatsApp for $19 billion. And just like that, we have the largest venture backed acquisition in history (Sequioa alone pockets ~$3B), and the largest tech acquisition since HP/Compaq.

The news already has a few haters. Facebook stock is down about 5 percent at the time of this writing, due presumably to unease in a clear monetization plan, and some stock dilution from the equity portion of the deal. You can also expect to hear the word “bubble” many times this week.

There’s of course a lot to it, and I’ll leave the valuation angle to colleagues that wear that hat. From a tech and media perspective, it’s clear that messaging is now table stakes for companies building mobile products. Apple has iMessage, Google has Hangouts, and so on.

Facebook already has Messenger but it’s been pretty benign. So accelerating its moves into messaging can only happen through acquisition. There are also natural synergies between mobile messaging and a company that owns social connections, identity and a built-in network effect.

WhatsApp meanwhile was getting too big to ignore. Its messaging volume approaches the entire global telecom SMS market with 19 billion messages sent per day and 34 billion received (imbalance is due to group messaging). It also sends 900 million photos, voice & videos per day.

So it was a competitive threat if not bought, and a potential asset if bought (sound familiar?). Facebook has 550 million mobile active users, and WhatsApp already has 450 million. More importantly, those are mostly non-overlapping overseas users where Facebook’s growth plans lie.

As for the monetization question, there are a few ways to think about that. Mark Zuckerberg stated on the analyst call that they won’t monetize the app through ad support (it currently charges subscription in some countries). And they won’t integrate it with Facebook proper anytime soon.

But in the absence of ads or direct monetization, WhatsApp could be an effective loss leader to grow Facebook’s global user base. User acquisition is vital for a company like Facebook for which there’s a lock-in effect and a high lifetime customer value.

Monetization can then come in all of the other ways Facebook is building its revenue model. In that light WhatsApp can be seen as a play at sheer scale. And that needs to happen globally, where Facebook’s user base will underpin its network effect and all future plans as a business.

So was it worth $12B in cash and $7B in equity and earn outs? Probably not. But it’s not necessarily about how much WhatsApp is worth, but what’s it worth to Facebook? This comes back to Mark Zuckerberg’s apparent vision of buttressing Facebook’s growth with a messaging platform.

Tech valuations these days are less about traditional metrics like revenue multiples and ARPU. We’re seeing more weight put on another longstanding valuation metric: projected future cash flows. The challenge there is that it’s mired in intangibles for lots of tech companies.

In other words, Mark Zuckerberg’s projection is different than yours. And this discussion isn’t complete without SnapChat.  Zuckerberg is clearly intent on owning messaging — including ephemeral messaging — if you consider the anemic launch of Poke and a failed $3B Snapchat acquisition.

WhatsApp now puts Facebook in the position to do what it failed to do in these earlier attempts. It can integrate ephemeral messaging at a scale well beyond SnapChat’s reach.  This is clearly a vital part (at seemingly any cost) of Zuckerberg’s vision to maintain dominance of the social graph.

More soon from colleagues on the valuation side. In the meantime just for fun, here’s a list of things that are equal in value to WhatsApp’s price tag, as assembled by TechCrunch. I’ll add to their list, 19 billion packs of baseball cards and 62 million leprechauns.

$19 billion is…

— 4x the market cap of BlackBerry
— Approximately one-third the market cap of Ford
— 2.8x the market cap of GroupOn
— Effectively equal to the market cap of The Gap
— Slightly more than Sony’s market cap (around 10 percent)
— Around three-fourths the market cap of Delta
— 7.5 Mark Cubans
— Almost precisely one-third of HP’s market cap
— 2 nuclear submarines
— 62 percent of Twitter’s market cap
— 76,000 trips to space on Virgin Galactic
— Almost 60 percent of Sprint’s market cap
— 25 Instagram acquisitions

The post What's App with $19B Acquisitions These Days? appeared first on BIA/Kelsey - Local Media Watch.

While the volume of deals (acquisitions and capital raises) in the local media space hasn’t really grown much this year, the volume of these deals exploded, according to BIA/Kelsey’s deal tracking effort called Local Media Investment Watch. Deal value across the local categories LMIW tracks grew by 65 percent to $10.2 billion year to date.

Today at BIA/Kelsey’s Leading in Local: Interactive Local Media conference, BIA/Kelsey analysts Jeanne Datillo and Jed Williams, architects of Local Media Investment Watch, shared some compelling data points that draw a picture of where the local media energy and investment interest lie.

Online was one of the fastest growing categories in terms of deal value (deal volume actually declined), expanding 150 percent so far this year. What drove this? According to Williams, the activity centered around digital services that drive engagement, upsell and retention — think CRM, online scheduling and merchant services. Examples include Open Table’s acquisition of Urbanspoon’s Rezbook reservation management system, and Hotel Tonight‘s ability to raise a $45 million funding round.

“This will accelerate over the next year,” Williams said. “As more investment, more agencies pushing into this space.”

Datillo also noted the home services space (which includes real estate) continues to attract deals. Examples? Trulia bought market leader, a tech platform for the real estate industry, for $335 million. “There is continued green space in the home services sector,” Datillo said. Other verticals are getting investment as well, noting recent deals involving Zoc Doc (medical records) and Wedding Wire.

“If you can innovate and be creative around niche verticals, you will get money,” Williams said.

What about social? Williams asked, “Consumer facing asocial networks, when does the door close?”

“If a social platform is creating a niche for a target audience, there is a good chance to get some investment.” Examples? NextDoor (raised $60 million), Path (raised $50 million), and Snapchat, which reportedly turned down $3 billion from Facebook.

The post At Leading in Local: ILM 2013: Where’s the Money? appeared first on BIA/Kelsey - Local Media Watch.