When Snapchat had it’s IPO in March of this year, Evan Spiegel was hopeful about the company’s direction. Instead of worrying about the platform’s growth, he wanted to “inspire creation because [they knew] a derivative of that is growth.” The company saw huge gains during in its first days on the market, reporting a 44% increase from its initial $24 offering; advertisers clamored for a piece of the pie, with giants like Viacom offering lucrative deals for advertising space in the millennial-friendly app.
In the months since that tide has turned. Snap Inc. has suffered a series of losses, most of them couched around misfires in product development in a scramble to stay competitive. They’ve spent over $300 million in acquisitions on companies like Zenly and Placed in an attempt to roll out new features like Snap Maps—an AR tool that lets users see where their friends are on a map. This alone wouldn’t be cause for concern; after all, the company has a reported $3 billion in assets to spend.
But the buck doesn’t stop there. Advertisers have voiced increasing frustration with Snapchat’s ad interface, frequently citing a lack of clarity on metrics and pricing. In part, this is due to the lack of standardization. For instance, high-traffic mobile video ads start at$10,000 per month, but ads on the Discover page can run an upwards of $50,000 per day. That disparity comes on the heels of an obscure, difficult-to-understand advertiser interface that shares little information about its users. Marketers have difficulty convincing their teams to advertise on the platform, with one professional joking that he’d rather take the money his company spends on Snap ads “‘burn it, and Facebook Live that experience…at least I’ll get measurement out of it.’”
Looking for Longevity
Jokes aside, there’s no denying the app has struggled since its initial IPO. The honeymoon period is over, and many are concerned about the company’s longterm longevity strategy. Q2 and Q3 saw low profits, stagnating user growth and increasing product encroachment. In Q2, user growth was an estimated 7 million—3 million less than projected by analysts; as for revenue, the company also fell short, bringing their then year-to-date loss to $443 million.
All the while, Facebook—who at one time offered to buy Snapchat for $30 billion—has been making inroads in the short-form “story based” social market. Their comparative offering, Instagram Stories has dominated Snapchat, with the platform’s top 12 influencers posting an average of 25% more to Instagram Stories than Snapchat. Reasons for this include Instagram’s larger user base and clearer explore function for user targeting. What’s more, Snapchat obscures follower counts in an attempt to be “content focused,” which creates hesitance among advertisers who want to invest in Snap influencers.
Just yesterday Facebook struck again, announcing its merger of Facebook Stories with Messenger Day, a feature that shares photos with friends that disappear after 24 hours. The consolidation marks another jab at Snapchat by simplifying the feature and opening the door to cross-platform posting. Though not as popular as Instagram (which boasts an impressive 300 million users per day), Facebook is progressively gobbling up more of the “story-based market.”
The Road Ahead
Still, everything’s not lost. The company is planning a product redesign after publicly acknowledging the app’s current UI/UX issues. They’re also planning to use metrics to target the platform’s influencers, who Spiegel admitted were previously “neglected” by the company. In a move to combat Facebook’s recently announced AR Studio, Snapchat is rolling out an improved version of Snapchat Lenses, which will hopefully spur advertiser dollars and user engagement. The improved version includes “context cards,” a little blurb below a sponsored filter with provisions for a responsive link.
There’s no doubt Snapchat’s doing its best to make a permanent mark in the social technology sphere. But what was once a revolutionary concept is now a standard, even expected part of the social experience. Whether this new round of innovations can rebound the platform is uncertain, though we’re hopeful. After all, there’s something to be said for singlehandedly producing the best meme filter of 2017.