It seems that everywhere you turn these days Snapchat is making headlines. It wasn’t long ago that the introduction of this company was met with a skeptical shrug. Why would a company want to make videos that disappear? What is the point of that? Flash-forward to present day, there is a big point. Snapchat is now a must-have for many organizations looking to get that extra cutting edge. If you are on the fence about this app for your own company, let’s better understand if it’s here to stay.
In 2011, Evan Spiegel and Bobby Murphy were two college kids with an idea for a class project. They developed a disappearing messaging app called “Picaboo.” The class was underwhelmed, but the two students still believed in their idea and eventually founded the company Snapchat, known today as Snap Inc. Just recently, Snapchat reportedly filed for an IPO that put its valuation in the range of $25 billion.
Snapchat’s Rapid Growth
This past year has been huge for Snapchat. Zoë Henry’s Inc. article “How Snapchat Made Its Competition Disappear in 2016,” states that Snapchat has become the fastest-growing social media company in the U.S., with users sending about 9,000 Snaps per second and watching more than 10 billion videos on the app each day. (In November 2015, Facebook reported that users watch around eight billion videos on the network each day).
According to this article, Snapchat has also surpassed the growth of major competitors Twitter and Pinterest. Part of this impressive growth may be attributable to the Discover feature that launched in 2015. Major publishers (The Wall Street Journal, NBC, NFL) rely on their own Snapchat channels to publish short video segments that stay live for 24-hours.
Snapchat Ad Revenue Exceeding Expectations
Advertising on Snapchat is immense, done primarily through video advertisements on user-generated “Stories” and Discover content. (Some extra money is made through sponsored lenses and filters, too). Per eMarketer, U.S. advertisers will spend $384.4 million on Snapchat advertising by the end of 2016 and it may grow to as much as $804.5 million in 2017. As reference, Snapchat originally aimed to come in at $50 million last year, so they exceeded expectations six times over.
In addition to the solid financial projections, the company also plans to expand its footprint through its first product, Spectacles. Sold at $130, these camera glasses will be offered to consumers for an enhanced experience.
Most organizations with a Millennials target audience already rely on Snapchat, since it reaches 41 percent of all 18- to 34-year-olds in the U.S. reports 2015 Nielsen data. Additionally, eMarketer predicts that the number of Snapchat users in the U.S. will increase by nearly 14 percent in 2017.
Challenges Still Facing Snapchat
Is it completely rosy for Snapchat? Not so fast. Like any other social media giant, there are always challenges and big competitive players. While the growth of Snapchat is astronomical, the audience doesn’t come close to the numbers of Facebook (1.7 billion daily active users) or Instagram (500 million users). The Instagram “Stories” feature is also in direct competition with the Snapchat offering, especially since Snapchat’s newly redesigned Discover platform allows publisher and user-generated stories to be presented together. Another potential challenge is Snapchat has offered to pay media partners up front instead of the revenue sharing model, which publishers may question the minimized control over how their content is sold.
There is also the big challenge that all social media companies are facing. Analysts say that it’s tough to “get individual users to generate content at the same rate that advertisers want to sell.” This is especially true for Snapchat since people are spending so much time on the platform. And, as Cathy Boyle, a senior principal analyst with eMarketer says, “it’s very tough in the mobile space to keep someone interested, because there are so many other options out there.”
Regardless of numbers and stats, all signs point to Snapchat staying in the game in a major way. It has a piece of the pie and everyone will have to wait to see what comes next.
Does your company use Snapchat? If not, does the projected growth of this app make it more enticing to try it out? Or, do you still have reservations about getting more involved with this app? We’d love to hear your thoughts!
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References:
http://www.inc.com/zoe-henry/snapchat-2016-company-of-the-year-nominee.html