It was once heralded as the next Facebook. Snapchat appealed to younger users in a way the social media giant had at one time failed to do (and still fails to do to some extent). But like parking lots at strip malls and attendance at major movie theater chains, Snapchat’s traffic has been steadily diminishing. Meanwhile Facebook’s users have grown to 2.23 billion – largely because they copied Snapchat’s most popular features on their own platform as well as on Instagram.
However, regardless of the infamous Kylie Jenner tweet, younger social media users still report that they largely prefer the app to Facebook. Among the billions of users is almost everyone’s parents – teens and tweens never want to be where they are watching. Snapchat, or at least a platform like Snapchat, still has value. But what does that mean?
There are several threads unraveling at Snap (Snapchat’s parent company) Headquarters, and many of them began with the redesign last spring. According to this article from The Motley Fool:
Over a million users ended up signing a petition demanding Snap bring back the old design, because the change made them feel as though they were no longer friends with celebrities like Jenner, but Spiegel more or less told everyone to go pound salt, and chided them for thinking celebrities were their friends in the first place.
Snap's bigger problem lies in the fact that its best ideas were too easily stolen by its competitors. Facebook's (NASDAQ:FB) Instagram app, for example, routinely borrows Snap's innovations, then does them better. As a result, Instagram's user base has soared to over 800 million compared to less than 200 million for Snapchat.
But the redesign and the copying of Snap’s innovations isn’t the only issue. There are also issues with now notorious CEO Evan Spiegel and that fact that Facebook and Instagram are already so established. According to this article from Forbes:
First, when Facebook went public in 2012, its after-tax operating profit (NOPAT) was $1.1 billion and the company achieved a 21% NOPAT margin whereas Snap’s NOPAT in 2016 was -$498 million with a -123% margin. Facebook has continued to grow its revenue, user base, and improve margins.
Second, when Facebook first entered the market, it did not have to unseat a large, firmly established and highly profitable incumbent. To become the next Facebook, Snap would need to take huge chunks of market share from Facebook, a feat it has proven unable to accomplish to date, while also drastically improving its margins. So, what does it all mean? How much lower could Snap fall as the noise turns negative and the fundamentals are exposed?
Hopefully the failure of these IPOs will convince investors to avoid future dual-class offerings. The success of Facebook and Alphabet led investors to believe that concentrating power in the hands of a visionary founder is a good idea, but most founders are not Mark Zuckerberg, Sergey Brin, or Larry Page.
So to sum up:
- Snapchat has had bad press over its CEO
- Snapchat’s redesign has been a failure
- Facebook and Instagram are successfully copying (and improving) Snapchat’s most innovative features
- Snapchat doesn’t have the push to unseat a giant like Facebook or even compete with Instagram, and that’s what it was trying to do
In short, because there is something to the fact that young people are seeking out a platform that is everything Facebook isn’t. There may not be any playbook yet for competing with Facebook head on, but it’s still a space where certain brands have a better shot at reaching certain audiences, particularly teens and tweens.
Moreover, Snapchat recently partnered with Amazon to introduce an innovative retail tool that uses Snapchat’s camera to scan items for purchase, which means they still have a few tricks up their sleeves.
With this to consider, our people had some thoughts on the way forward:
Some of us feel that Snapchat still has the potential to be salvaged.
I think this is another case of a tech company designing at the white board instead of actually looking into what its core audience (and the people that they make money off of) want. I think Snapchat could make a comeback if goes narrow and deep with its functionality and what it does as a company instead of shallow and wide. It's never going to be everything for everyone and every brand, and it shouldn't try to be. Brands are just now getting comfortable with VR and augmented reality as content and advertising options, and I see that being something that could set Snapchat apart if they do it the better than the other apps. – Meg McElhaney
I'd like to see Snapchat retain the simplicity I found attractive in the app rather than trying to become too many things at once. – Bryce Ewy
Some of us think that Snapchat is at least still viable for now.
Should brands still advertise on Snapchat? A reluctant yes, if you have a product that skews tween/teen. But other than that, until and unless, they get their act cleaned up, there are better ways to spend a client's budget. – Debby Johnson
The young Gen Zers I know use Snapchat as their primary messaging app. Why, I wondered? Doesn’t Apple Messages give you everything you need? The answers I found were interesting, but not surprising. Gen Zers are described as “mobile natives,” living their entire lives with the world in their hands. Their concept of speed and transparency has even far surpassed mine.
Texting through Apple Messages is probably like sending hand-written letters through the mail like a grandma. Integrating media is clunky, the functionality clearly favors text over visuals, and worse yet … there isn’t instant gratification to know that every last one of your baes (slanguage for friends) has received and is gucci (good) with your outfit choice for tonight. – Katie McQueen
But the main takeaway is that Snapchat is a niche platform that has been wildly overrated from the beginning, and brands should treat it as such.
People need to adjust their expectations accordingly for the platform overall. Snapchat is a niche focused social media platform in the same way that Twitch is today. Twitch is obviously much more niche within a different demographic and less than 10% of the DAU than Snap. As long as this "valuable" audience is spending significant time on the platform, it has a reason to exist for brands. – Jesse Greenberg
Millennials are all on Facebook because that was mostly all there was for us at one time (I mean MySpace, but that is ONE other contender). It is highly unlikely that any platform will ever match it because no other platform will be in such a narrow market place when everyone is signing up. Gen Zers have always had so many more choices. Facebook will eventually fade out, but not to another Facebook most likely, to millions of tiny little cliques formed around what social media they use. I think they are all going to be niche platforms and should be treated as such. – Ryan Winkler Herr
While Snapchat might not have been the mega social media disruptor it was once hoped to become, it is still a platform with value, and understanding what works (and what doesn’t work) for it can advise how brands advertise on social media platforms. These are our conclusions:
- Brands should advertise to young people on niche platforms like Snapchat.
The teen/tween market is always going to look for niche platforms that aren’t closely watched by their parents. Whether they will continue on there into adulthood or eventually be assimilated into Facebook is yet to be determined.
- Snapchat is still a viable platform, though others will likely compete with it for the same audience.
Until more “digital natives” like Gen Zers disrupt the Facebook powerhouse by gravitating toward niche platforms they grew up with, Snapchat will likely be one of many platforms competing for one demographic’s attention.
- Design and usability is important, but most important to these “digital natives.”
The moms who only get on Snapchat to put a dog nose on her baby is never going to figure out how to click on your ad. Find her on Facebook.
- Influencers are one of the driving forces behind attracting users to these platforms.
Given the way Snapchat users reacted to several tweets in this whole debacle, brands should consider that finding influencer ambassadors on these niche platforms is more valuable to this demographic than click ads or other impersonal avenues might be.