Snap's fate was preordained because of the vice grip Google and Facebook have on online advertising. The only way to deal with market failures is aggressive antitrust enforcement. The EU has begun and others are sniffing around [1][2]. Democrats are starting to relearn the politics of trust busting [3] and candidates are starting to run on antitrust platforms [4]. If you work at a startup and you don't want your opportunity to be foreclosed by monopolies, you should support them.
Perhaps there isn't just a good way to weave advertising into an app originally designed to send ephemeral pictures to friends? It seems like that's the real reason Snaps fate was preordained, and has nothing to do with Google/FBs ad empire.
Instagram and Snapchat share exactly 1 feature ("Stories"), so I really don't see how this shows that Snapchat is failing due to Google/FB monopoly, and not due to the reason I listed above.
Instagram is more analogous to Twitter, and I assume advertisements occur both within the "Stories" and the newsfeed - this seems much more favorable to advertisers and is something advertisers are more used to.
When Facebook can graft Snap features onto every endpoint of their network, there's no oxygen left for Snap. They cannot get scale, and that's what you need in advertising.
The online advertising world has changed a lot since Facebook's IPO. 180m users and an awkward ad buying experience aren't as compelling as they used to be.
Plus, it sounds like not all of those 180m Snapchat users are interacting with the part of Snapchat where they would see ads, so the audience is smaller.
That said, I completely agree that a lack of users isn't preventing them from having a decent advertising business. It's just preventing them from doing it on the terms they want.
They got scale, particularly among the younger demographic where the product was wildly popular. They never cracked an advertising model that worked.
I buy that it's harder for startups to break into social today, but that's true of most industries as they consolidate, I don't know that it means they're a monopoly.
Slack is a social networking tool that has managed to grow and scale by focusing on different use cases and by using a different business model.
If Snap had figured out how to get to profitability, or even focused more on reaching out to older users they may have found themselves in a different situation.
I haven’t seen ads on Instagram stories, just intermingled in the feed. They are spookily relevant and noticeable.
Snapchat ads come at the end of 1 person’s story, or between random people if you have multiple peoples’ stories queued. I never do the latter because it’s a dark pattern to make you wait for the ad to finish before the next story, so I always watch 1 person, and swipe out if there’s an ad. In general, it seems like Snapchat ads are higher production quality and less relevant.
The Stories feature is _by far_ the most valuable to advertisers. It's reductionist to diminish that to "one feature they share". Particularly because Instagram straight up copied Stories from Snapchat.
And why do you think they are doing that? These customers are monitoring their ROI from these ads.. they know if they are effective.
Do you really think any of these customers are saying to themselves: "Gee Snapchat ads are so effective and are making us so much money... we better stop it immediately."
You are right, Snapchat's failure to monetize their inventory has nothing to do with either Google or Facebook, simply because neither Google or Facebook has access to the Snapchat inventory to begin with.
I believe advertisers are not jumping on Snapchat's inventory because the perception about said inventory: kids chatting with other kids and porn. Why would you advertise on that?
A small percentage of companies are actively advertising on that. The featured stories (ads) on Snapchat almost always use sexual imagery to bait you into opening them. I agree, I don't think that's a sustainable model and it honestly shows how desperate Snap is to make revenue to allow these sort of ads.
Advertising is all about inventory and how you monetize it. Snapchat has the inventory but they don't seem to be succeeding yet at monetizing it within their current business model.
The calls to action are nearly impossible within the current app context. Here are some random use cases that advertisers would pay money for:
* A mobile install ad paying for a download
* A mailing list or newsletter, acquiring e-mail addresses
* An e-commerce shop selling goods or services, paying for sale or sign-up
None of these scenarios work particularly well within Snapchat. Given the payment hurdles on mobile, I am guessing the e-commerce angle is a pain for most mobile apps.
Thanks for posting this. I am not bullish on SNAP but I highly encourage people to look at that data here. It is a much less dramatic story than the article, a lot of the data actually looks pretty good and at this point the data is fairly out of date anyway (a full quarter has passed since it was gathered). The one graph that is included in the story, showing that Maps is not being used much, is the only truly negative graph I could find.
The range of average minutes per day on the app is between 32 and 37 minutes. That's insane and honestly pretty sad, especially when you consider how few people only use snapchat. How much time is wasted across all the different social media apps?!
Why do you think it's wasted? Time you enjoy wasting is not wasted. Most people use it to message their friends, and communication with people you like is one of the key joys of living
Where is the line though? What is genuine enjoyment versus a dopamine hit, like a mouse pounding on the lever to get as much cocaine or electrical impulses possible? It’s all chemical reactions in the end I suppose (says my internal nihilist).
I think a key difference is that Snapchat is not a feed app. There's no endless scrolling to waste 30 minutes on to give you that dopamine hit. The time spent is mostly being spent as a messaging app I suspect if you look at the levels of use of app features. Do you think it's a problem to spend half an hour a day texting + sending pictures to people?
Any idea what happened around July 7 that would've caused those dips in almost every chart? I initially thought the July 4 holiday, but I would imagine more people would actually be using Snapchat on that day. Perhaps it's the hangover day on July 5th?
From the latter half of the article, a purported example of a positive trending data point:
> Investors who reviewed the data also said the fact that people are sending and receiving so many photo messages on the platform gives it a huge leg up on iMessage or Facebook Messenger.
> The majority of conversation that happens on most chat apps is text-based, and other platforms struggle to get users to exchange photos or videos. Investors said that completely visual messaging at this scale is “a pretty big deal.”
> All of this backs up Spiegel’s own depiction of Snapchat. In the past, he has said that users taking selfies on the app aren’t being vain or snapping photos to post later on social media, they’re “talking with pictures.”
I get the appeal of Snapchat but never got into using it. The only social media chatting I use is Facebook and I do it with other old people who prefer text. Is there something about the Snapchat implementation that makes image-chatting more natural and frictionless compared to Facebook or Instagram? And what leverage does this image-heavy chat habit have for Snapchat, if those users can't be drawn to the other money-making features?
As the others have said it's the ease with which you can send a photo -- it's right there when you open the app. With Messenger you've got a bunch more clicks and a slower camera, and with Insta even more clicks (chat not being a core feature of the app).
Thinking about it, there are two major differentiators between Snap and those two. First is the order in which you choose who to send a message to and what the message is. Second is how you can send the same message to multiple people simultaneously.
With Messenger & Insta you choose your recipients first, while with Snap you take the picture/video first. This is naturally easier for a spur of the moment message; you don't have to think about who you might want to send it to while the thought is still fresh, or indeed while whatever it is you're snapping is still happening.
Snap also has a great model for sending things to multiple people. Say I'm taking a picture my cat doing something silly. It's not interesting enough to go on my story (by whatever metrics I have for that), but I also want to send it to multiple people. There's no way I'm going to create a group just for this; it'll never be used again and there's no reason for the people I choose to be connected with each other. Snap solves this in a way that Messenger and Insta don't (or at least if they do I've not seen it advertised). That's not to say groups aren't really useful -- I'm surprised it took them so long (years?) to implement them.
I use Snapchat and my friends use it. It feels much more personal than Instagram or Facebook, which are social media platforms that extend beyond my close friends and include acquaintances. People can't comment on your story - they have to message you if they want to say something, and group chats in particular keep me using Snap.
I will say that their Android app is more or less garbage and should be an embarrassment to the company. It doesn't function right, it's slow and clunky, and it's infuriating to use and I've moved to IG more and more as its gotten worse. I know Snap is addressing that issue by rebuilding the app, but they have only started caring recently.
I would hazard a guess that the disappearing nature of the images makes it much more natural to share candidly. Most the things I snap are nowhere near worthy of being immortalized on Facebook, or even in iMessage for that matter. But a quick snap? Sure, why not? Its second nature to snap a quick pic of whatever I'm doing and send it to the relevant person/people, and it makes for a much more rich experience compared to other platforms.
Aside from that, the disappearing nature of chats at all (be it text, image, video) I believe also leads to more engaging conversations. Participants have to be paying attention to one another lest they forget the last response, in stark contract to every other popular messaging platform. The result is that less conversations happen, but when they do they feel more engaging (and addictive... no doubt this is part of the strategy).
Agreed, but that can also be replicated, whereas most platforms would be very hesitant to switch to disappearing messages by default. I think this is a (if not the) key differentiator.
If you couldn't tell, I'm big on snapchat as a messaging platform, not as a social platform.
> "I'm big on snapchat as a messaging platform, not as a social platform."
As a user, I think this is why most people fail to understand it or use it. Even if one has friends on Snapchat, if you go in trying to use it as social media you're going to be confused. It's a personal messaging app that happens to have some small social aspects, a map that I occasionally use so I can see where people are, and publisher content when I'm looking to kill a few minutes here and there. But 90% of my time is spent messaging people with pictures / chats, and groups are amazing.
I find myself sending pictures and videos in chat all the time, simply because of the ease of it. Say I'm cooking dinner and a friend asks me, "what are you up to?". It's just as easy for me to send a quick video of the skillet sizzling on the stove, as it would be to type out a descriptive response.
From hearing how much Spiegel & leadership hate leaks, I wonder if they have some kind of watermarking in place for sensitive data. E.g. a trustworthy leader has access to the full, real data, and each engineer/analyst upon querying for dating receives results slightly fuzzed by a known amount. If that data is leaked to the press, the fuzzing could let leadership burn the mole.
Has there been any proof-of-concept or product for data watermarking at the DB level?
It would require so much work to do that at a large bureaucratic company with multiple layers of management across multiple teams. You'd be putting up gates for every time some designer wants to restyle a button, every marketing person who wants to to a/b testing, and every infrastructure engineer who wants to test a release or do load testing.
> “If DAUs go down or stay flat, the stock could go under $10,” one former employee said. “I feel like if that happens most people at the company will just quit. I know several friends already looking to get out.”
That might be optimistic on the part of the employee.
Snap chat is in a bad position in that they don't have their Donald Trump like twitter to keep in in vogue, and they don't have their advertising cash cow like Google/FB to make it profitable.
Heck due to their screwy share structure they don't even have the passive investment to prop up the stock that almost all other public companies do.
And due to the lack of voting they also remove the option of a forced takeover like GoPro does to give merger arb funds a reason to hold the stock.
To paraphrase Stephen Fry
Snap is the company that peed in the pool for all other investors wrt to ownership control :(
There doesn't seem to be a clear reason to use Snapchat if you don't already know people on it. I found the app itself so confusing, I needed someone to explain to me how to use it and what the point of it was. That is a UI smell to me.
As an investor, I wouldn't have much confidence in this product when top executives are departing after the IPO. The culture is exactly antithetical to the agile environment most developers are accustomed to and I don't see how they can attract talent. I don't even know how Snapchat could be monetized.
Contrast that to Instagram, a simple app based on Images and Videos with a clear way to monetize it (sponsored posts). If you can use Facebook, Twitter, etc. you can use Instagram. They can also easily clone any 'killer feature' that may come out Snapchat.
I saw a few times posited the idea that Snapchat is some kind of dividing line between older milennials and younger ones/younger generations in that if you've never installed it or can't understand how/why to use it you're in the former group.
Yep, thought of that article when I made the comment. If the appeal is limited to a particular generation, that's bad news. The person who showed me how to use it doesn't really use it anymore. Anecdotally, that tells me people grow out of it.
Well, maybe, but if, theoretically, the app were popular with everybody born after 1995 or so the problem would eventually solve itself. I've never known anybody who uses it though.
Man, given that some youtube channels get ~5 million per day, isn't ~85 million per day using snapchat kind of low? I would expect way more than only 20x interaction with snapchat than with one-man shows like that. 20 big channels and you're up to the entirety of snapchats user-base.
I've known people who worked at Snapchat and told me it was a haven for Visa sponsorship. This isn't a negative but it's possible that turnover will be extremely high once these employees get their visas/greencards.
None of the stories in the Discover section ever appeal to me. Snapchat is great for sexting and in the gay community is used by a lot of people to create/share amateur porn. Maybe they could monetize that somehow.
The key thing to note for Snapchat is the growth rate over time, especially since charts during the IPO indicated DAU growth has flatlined.
The charts in this article have truncated y-axes so growth is harder to eyeball. I wish the article included a more statistical approach to the new data.
Also, what happened on July 7th that caused the big dip in metrics?
Just looking at the patterns I'd guess they have a huge amount of usage from school-age kids.
In the summer months you see higher engagement per user. You also see a compression of the weekday-weekend cycle. Both imply that something in the summer makes users use it more and especially on weekdays. Gotta be students.
I have never understood the appeal of Snapchat and it seems destined to fail, but that said, I did think those glasses they developed were a cool, new, surprising idea from what I had considered an app company.
[1] https://www.nytimes.com/2017/11/13/technology/missouri-googl...
[2] https://www.reuters.com/article/us-israel-antitrust-internet...
[3] https://washingtonmonthly.com/magazine/novemberdecember-2017...
[4] https://twitter.com/AustinFrerick/status/950149470863417347