You might know the white little ghost from Silicon Valley: Snapchat, an app created in 2011 and which became known across the planet for its self-destructing messages.
Snapchat’s approach is different from other social networks: it does not count likes, the number of contacts. It is a mobile playground which encourages creation, fun, and spontaneity.
The app nowadays is famous for its “stories concept”, its geofilters, its lenses (those AR masks that people love to play with) and, more recently, for its media content which works like a digital mag :Discover
Snapchat’s total audience is around 170 million users. (11M in France). What a success story in only 6 years! This growth is particularly due to a user-centric strategy.
2/ A user-centric strategy that has appealed to teens
Snapchat wants its users to have fun and spend time on the app. The platform is constantly evolving. Lenses and filters available change every day which gives a good reason to open the app and start interacting with friends or contents (Discover).
For instance: ⅓ of snapchatters are playing with the lenses every day. Users go to the app mostly to stay in touch with friends, see what they are doing in real time and interact with them in a funny way. Snapchat has also invested in new technological features dedicated to users.
Fully invested in AR, Snapchat launched in April 2017 the World Lenses are a 3D object that interacts with our environment. The firm is continuing to invest in AR, notably for instance through its collaboration with Jeff Koons which allows seeing through AR certain pieces of art in a certain location in the world.
Users can also enjoy SnapMap which was released in June 2017. It gives an overview of snap users in the world: you can locate your friends, see what they’re doing but also what is happening in the world in real time thanks to a curation of snaps.
This strategy has particularly seduced teenagers, and more precisely the Z generation. We know that 62% of the Snapchat audience is aged between 13 and 24 and this year Snapchat is teens’ favorite social network (far ahead of Facebook) in the US. But Facebook is fighting back.
Sources: PiperJaffray 2017
3/ Difficulties come from the outside and the inside
Snapchat turned down the 3 billion offered by Facebook in 2013. This testifies Even Spiegel’s (CEO) ambition! Facebook’s response was brutal: in a couple of months they introduced the stories’ concept on Instagram, Facebook, Messenger and Whatsapp even if people didn’t need 4 stories places! Facebook also introduced lenses in Messenger to add fun selfies. Finally, to target Snapchat’s audience, Mark Zuckerberg has recently announced the creation of Facebook Watch, a video content platform where people can follow their favorite influencer or TV show.
Not really fair but efficient, in the beginning of 2017 Instagram Stories were more popular than Snapchat one. (200M vs 170M)
Snapchat also has to face the failure of its hardware concept: Spectacles. Those sunglasses with video captation released last year were a flop. Only 150 000 spectacles priced around 100 euros apiece were sold around the world. Even if the CEO said it is a bet on the future, it reminds us of the Google glass episode.
Snapchat has difficulties to be profitable. Their last financial results are quite alarming, Snapchat doesn’t make money and it worries Wall Street: “Snap Inc. lost $443m in the second quarter. The company paid out $242m in stock-based payments and associated taxes over the quarter. The mobile app’s revenues rose 153% to $182m, but were below Wall Street forecasts.” Snapchat is in need to recover financially and to adopt a profitable strategy.
4/ Developing a client-centric strategy
Snapchat offers 3 formats for advertisement: sponsored lenses, geo filters and snapads (short video placed between two stories or in Discover articles.) They are betting on Discover to boost the number of SnapAds.
A few years back, clients were complaining about how hard it was to make advertising on Snapchat as no dedicated platform and data to measure the campaign’s’ efficiency was available. This is the reason why the firm created Business Accounts which are dedicated to clients (like Facebook Manager) and allows to manage campaigns easily on the platform. The objective is to encourage brands to invest in Snapchat as a media.
Finally, last month the company announced (in the US for a start) a partnership with Tripadvisor to create SnapCards. The context cards will provide reviews of restaurants, hotels, and bars…The introduction of Snapcards contributes to the client-centric strategy to make money with brands and shops.
Snapchat has to find the balance between investing in new features and making money. There is a real risk in proposing more and more services to clients which might reduce the users’ engagement and loyalty to the platform. Snapchat is walking on eggshells.