Snapchat has managed to maintain its reputation as the innovative new social media kid on the block for a while now. Younger generations have fawned over the app’s originality – and in the wake of growing concerns about Facebook privacy settings and Twitter trolls, the photo-sharing app’s disappearing images seemed to provide the perfect anecdote to the privacy conundrum.
Now Snap, the parent company of Snapchat, is set to make its stock exchange debut next month – the biggest US technology initial public offering (IPO) since Facebook went public in 2012. With a user base of 158 million daily active users, soaring revenue from $58 million in 2015 to $404 million in 2016; and an IPO valuation of around $20 billion, nobody can deny that Snapchat’s rise has been impressive. However, the app’s slow growth rates, increased competition from rivals (such as Facebook and Instagram); clumsy design interface, inability to leverage advertising effectively and increase in losses ($524 million in 2016); has led the company itself to admit that it ‘may never achieve or maintain profitability’.
So, while investors will be hoping that Snap can deliver extraordinary Facebook-style returns
(shares have risen some 250 percent since its stock exchange flotation); the company could equally be the next Twitter – which recently reported that its fourth-quarter losses nearly doubled in the final three months of 2016.
Should you be investing time and resources on developing a Snapchat presence?
As with any marketing channel, it first and foremost depends on the kind of audience you’re looking to attract and secondly on how you perceive Snapchat’s plans for it’s future. For the former, read our earlier blog on Snapchat for travel brands where we outline the pros and cons and highlight some interesting opportunities. As for the latter, the launch of Instagram Stories last year – which directly competes with Snapchat Stories – kickstarted a whole new set of problems for the app. After all, how can Snapchat compete with Facebook when the platform has a much larger core user base (1.83 billion) and could also start syncing Stories across Facebook, messenger as well as Instagram in just one tap?
What will Snapchat do next?
There’s been much speculation as to Snapchat’s next move – the company’s already focusing on camera equipped Spectacles – connected sunglasses that can record video snippets. Equally, the photo-sharing app could focus on evolving into a media platform, or something bigger, to stop competitors from stealing its users. Whatever happens, we at Digital Dialog believe brands should keep their Snapchat investment plans on hold until the company’s future becomes clearer. Social communities take a lot of hard work to build up, and as it stands, there are other more viable and successful marketing channels that are more worthy of your time.
