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Snapchat recently released its Q2 earnings report, noting loss of about 3 million daily active users (Source: Inc.). This marked the first drop in users in the company’s six-year history, and it’s news that, quite frankly, seemed to be a long time coming. A+P Digital Team member Maggie Familetti takes a look at Snap Inc.’s journey and discusses where future opportunity may exist for the popular but polarizing app.
When I first saw someone use Snapchat in 2012, I thought: “That’s it?” At the time, I still had a so-called “dumb” phone and I expected much more from smartphones. But all I saw was 2 seconds of a grainy picture that then disappeared before my eyes. Despite this, Snapchat was all the rage for those first few years. And when I got an iPhone in 2014, it was the first app I downloaded. Snapchat was almost a necessity for staying in touch with friends. With the addition of face filters, chat and video chat in the ensuing years, it seemed there was nothing not to love.
Enter Instagram. In 2016, Instagram launched its “Stories” feature, which copied many elements of Snapchat’s own Stories feature. The stats that followed spoke for themselves: Snapchat growth slowed 82 percent after Instagram Stories launched. By June 2018, Instagram Stories had twice the amount of daily active users as Snapchat. It made sense – Instagram Stories presented a more easily usable medium for brands and influencers who were already on the platform, allowing them to use Snapchat-like tools without having to create another account on the app.
Then in late 2017, Snapchat released a full app redesign, which changed the location of Stories, Discover and other app features. The move was initially intended to clearly differentiate between content from friends and content from celebrities and influencers. In the words of Snap Inc. CEO Evan Spiegel, the goal was to separate “the ‘social’ from the ‘media’.
Consumers didn’t see this as a plus – in fact, 83 percent of the App Store reviews for the update were negative. Power user Kylie Jenner tweeted she had stopped opening the app, and a Change.org petition calling for Snapchat to reverse the redesign garnered more than 1.2 million signatures.
Snapchat’s missteps and misfortune seemed to culminate in August 2018, when the company reported it lost more than 3 million daily active users in the second quarter of 2018. Snapchat blamed the loss on the redesign, and Spiegel claimed the company’s monthly active users were actually growing.
But all these hits over the last year beg a question: is this the beginning of the end for Snapchat? Was the loss in daily active users the death knell some had been expecting for so long? The simple answer is no, probably not. Why? Because Snapchat has one thing that no other platform has: its specific, highly sought after audience.
Snapchat has long been popular with U.S. teens ages 12 to 17, first surpassing Facebook as the most popular social network among this age group in 2016. Now, according to an August 2018 study from eMarketer, there are 16.4 million 12-17 year olds on Snapchat compared with 12.8 million on Instagram. And the app is expected to remain dominant among teen users through 2022. Additionally, 78 percent of 18-24 year olds use the platform. This indicates that despite the snags of the last few years, Snapchat still has the ability to reach Generation Z in a way that few other social platforms can.
As a result, all signs point to advertising and brand partnerships as the way forward for Snapchat, and 2018 has already seen some unique and successful examples. In August, a partnership with Adidas saw the brand announce a new shoe on the Snapchat show “Fashion Five Ways,” with the goal of targeting a younger, more female audience who would “talk socially about the sneaker.” And it paid off – the shoe sold out in 6 hours, a clear indication the activation was successful in reaching the desired audience.
Examples like this prove that there is still success to be found in Snapchat. A large amount of that success can be achieved through advertising, potentially with an e-commerce play attached. Snapchat itself sees where its future lies – on Aug. 29, the Interactive Advertising Bureau announced the lineup for its West Coast iteration of the annual Digital Content NewFronts. For the first time ever, Snapchat will be a participant. These events are typically a chance for digital companies to “impress advertisers and persuade them to support video endeavors” such as shows and other original content, and Snapchat’s participation may signal an internal realization these solutions are its best path forward.
So where does this leave brands? Overall, it seems not much has changed in terms of how brands should view the platform. There may be a shift if and when Snapchat rolls out new advertising solutions in the coming months, but for now it would appear to be business as usual. Brands may choose to advertise on the platform, but should have clear, audience-specific goals in mind when planning campaigns and creating highly-tailored content.
If possible, brands should choose Snapchat only if their audience already exists on the platform, in order to maximize their advertising. Content should be relatable, inviting, and not too polished – Jessica Taylor, a former digital ad manager for Google, says that ads should look like “messages from friends.”
Overall, the future could still be bright for both Snapchat and the brands that buy its ads. With new formats on the horizon and successful campaigns in the rearview, Snapchat needs to lean into its identity as a more niche platform with a specific audience. And brands need to fully embrace the opportunities that come with this.
Maggie Familetti is an account executive on Allison+Partners digital team.