Is Facebook Building a
P&G-Style House of Brands?
Long Focused on Acquiring Companies Mostly for Their Talent
Dave Knox
Back in 2008, I had the chance to lead Procter & Gamble’s
Joint Business Planning with Facebook and other big digital
media players. The intent of the Joint Business Plan wasn’t
about just increasing advertising dollars. It was about sharing
knowledge between the two companies with the goal of
having a strategic relationship where we both became better
businesses as a result. P&G expanded its digital knowledge
while Facebook learned more about how brand marketers
thought. Now that Facebook is buying the messaging system
WhatsApp in cash and stock valued at $16 billion, it looks
like the company didn’t just learn how to think like P&G; it
may be becoming a P&G as well.
What I mean is that Facebook appears to be using the Procter
& Gamble playbook for building a “house of brands.” This
playbook is about building a portfolio of businesses that
often will compete against each other but ultimately give
your company a larger market share. For instance, P&G’s
global laundry market share is around 31%. This includes
brands like Tide, Gain and Ariel, each of which contributes
above $1 billion in annual sales. But the company also has
brands like Bounce, Downy, Era and others that all compete
in the same space. The same goes for baby care with both
Pampers and Luvs as well as hair care with Pantene, Head &
Shoulders, Aussie and Herbal Essences.
Facebook has long been an active acquirer, with WhatsApp
being its 45th purchase by some counts. But its purchases
have historically been either acqui-hires for the talent or
foundations for future Facebook features. Hot Potato became
the basis for Facebook Places, for example, while Karma
became Facebook Gifts.
But this might be changing. The first indication was the
purchase of Instagram in April 2012. At the time, Instagram
CEO Kevin Systrom wrote bluntly in a blog post that “Instagram
is not going away.” As we near the second anniversary of
that deal, those words have held true and Instagram is an
even stronger brand today than it was back then.
With the WhatsApp purchase, the key message track for
Zuckerberg and company is that “WhatsApp is on a path to
connect 1 billion people.” The talk isn’t around how WhatsApp
will fix Facebook Messenger, but about the potential of the
WhatsApp brand and service.
P&G says its purpose is to “provide branded products and
services of superior quality and value that improve the lives
of the world’s consumers, now and for generations to come.”
Facebook on the other hand says it wants “to give people
the power to share and make the world more open and
connected.” With the addition of WhatsApp and Instagram,