When Instagram launched Stories in August 2016, many saw the beginning of the end for Snapchat.
Then there was March’s IPO, which was initially hailed as a great success – until Fortune declared it an “epic fleecing” two months later.
Snapchat is in a state of flux. Its investors are growing impatient. This hasn’t been helped by recent reports of waning interest. According to Mediakix, platform use is down 34% among top influencers. And it’s stories like these that have led eMarketer to slash Snapchat’s 2017 ad revenue forecast from $900m to $774.1m.
The numbers are indeed a contrast from WPP boss Sir Martin Sorrell’s earlier prediction that the platform would reach $1bn in ad revenue in 2017 – an admission he made in August after announcing his company, the world’s biggest advertising group, would double its spend in Snapchat to $200m.
Snapchat has experienced its share of problems – slow growth, constant cloning by Instagram, and an inferior advertising model to Facebook’s (to name a few). But Evan Spiegel, the CEO of Snap Inc. [Snapchat’s parent company] has remained defiant.
Fortunately for him, more brands are taking an interest in the platform. These include Burger King and Sainsbury’s, who last month showcased two ads shot entirely on Spectacles. The latter did so in a bid to reach a younger generation of shoppers [Snapchat users under 25 spend an average 45 minutes on the platform daily].
But partnerships aside, Snapchat still fails to compete on numbers when compared to Instagram. Recent figures show that the Facebook-owned app now has two million advertising clients, 800 million monthly users (MAUs) and 500 million daily users. In comparison, Snapchat has 173 million DAUs as of Q2 2017.
Tot up the numbers and the whole thing begins to read like David and Goliath. David did beat Goliath, but Snapchat has a mountain to climb if it’s to get anywhere near its rival. Is the platform dying? To most, yes. But that’s not to say it doesn’t have options. Here are our three predictions for the future of Snapchat…
Theory #1 – Snapchat and Twitter announce a merger to take on Facebook (for real, this time)
Snapchat and Twitter have suffered in the midst of Facebook’s success, but there could be a light at the end of the tunnel in broadcast media. Both platforms have inked a string of high-profile partnerships with numerous major media outlets and publishers – BBC, NBC, VICE, the NFL, etc.. Facebook knows the future lies in original long-form video content, so any type of joint venture could be problematic.
Likelihood rating: stranger things have happened.
Theory #2 – Snapchat Spectacles take off and Spiegel rides the wave of augmented reality
AR has had mainstream success, thanks to lenses and Pokémon GO; however, the question is whether Spiegel can convince consumers to part with their money for an experience most can easily enjoy on their phone. He, like many others, will be waiting for virtual reality headsets to enter the mainstream in 2018. Most of us are used to augmented reality, but wearable hardware is, for the time being, a niche luxury.
Likelihood rating: very likely.
Theory #3 – Google buys Snapchat in the most expensive acquisition deal since Facebook/WhatsApp
Everyone has a price, even Snapchat. Could Google one day buy the ailing platform for a record-fee? The search engine giant did launch an earlier bid for $30bn, which reportedly still stands, but Spiegel rejected it. That said, both parties are now working closely together on new projects and initiatives. As acquisitions go, this one makes perfect sense for both parties. Surely it’s only a matter of time before Snap gives in?
Likelihood: somewhere in the middle.
Bonus Theory #4 – Snapchat gets it very wrong
With competition coming from all directions, Snapchat needs to innovate fast to re-ignite interest and drive users. Its new advertising tie-ups with start-ups are a step in the right direction, but we can’t see it being the “third force” to Facebook and Google’s duopoly.
So far, we’ve spoken about features and acquisitions… but what about audiences? Instagram may be flying, but Snapchat still has a loyal following in Gen Z (born 1997-2015) who favour the platform’s ephemeral text-based service and custom geo-filters – despite the inevitable cloning.
According to a recent poll by Ipsos Mori for BBC Newsbeat, over half (56%) of Gen Z use Snapchat compared to just 20% of millennials. Likewise, this is just 3% lower than the proportion of Gen Z who use Instagram. The truth is Gen Z still favours choice – they won’t let their usage be dictated by stock prices and growth reports.
Snapchat can seek comfort in its loyal Gen Z following… but for how long?
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