No one expected Snapchat to be here. Over the last decade, most marketers and analysts didn’t think the burgeoning social network was going to make it. At first, most suspected it was just a fad for ‘the kids’ - a fun chat app they would grow out of. Then, after seeing success with advertisers and growing their user base, the competition intensified. Amidst Facebook’s ever-growing appetite for engagement and retention, feature after feature from Snapchat would get copied and swallowed up - integrated into Instagram, Facebook, or both. Despite this mounting competitive pressure, Snapchat has not only survived but thrived.
In many ways Snapchat heralded in the short-form content era that is in full swing today. Their innovative ‘stories’ and ‘discover’ content paved the way for the full scale investments in short video content we’ve seen play out with companies such as TikTok, YouTube, Netflix, the short-lived Quibi, and many more. The market seems to agree that this will be a dominant format for the foreseeable future and advertisers have been quick to embrace it as well. With all these new channels and options for consumers, one would think it would be difficult for Snap to keep pace and continue to challenge them. However, recent performance from the young social network suggests they will be just fine.
Photo by Alexander Shatov on Unsplash
A Snapshot of Further Success to Come?
When you have created a social media product and app like Snapchat, keeping pace becomes difficult. TikTok has been relentless in it’s attempt to take over the scene and to a large extent has taken over the space that Snapchat used to occupy. Despite the tables turning on them, Snapchat launched their rebuttal to TikTok last year - Spotlight. After investing heavily in content from creators to seed engagement, the feature had achieved 100 million monthly active users by the end of last year. While some doubted this could be sustainable, the early performance of the content in 2021 suggests a sustainable opportunity for Snap. The Spotlight content is now seeing 125 million monthly active users and has inked partnerships with Gucci and Northface. Not bad for a knockoff feature.
Beyond Spotlight, Snap has responded by taking a page out of Facebook’s playbook and attempting to turn TikTok’s success into their own. Take their forthcoming ‘remix’ feature as an example of what we’ll likely see more of in the coming years. It’s not unusual to have product features be dictated by consumer interest - even if it is coming from outside your own app. In the social network wars, everything is fair game these days. If they make the right bets and user engagement continues to climb, advertisers and Snap will continue to be happy campers.
So far this strategy has continued to pay off for Snap. Revenue is up about 60% and their stock is up 260%+ year over year at the time of this writing. Clearly, they’ve proven skeptics wrong and look to be a player for quite some time. From a marketer’s perspective, Snapchat has done something very difficult. It is no longer just a nice-to-have channel in a marketing mix - something to pilot and learn from - but one that is expected to be part of a brand’s budget and drive impact. Even TikTok, although gaining significant investment from brands, is still seen as somewhat risky and untested by many.
This trust in Snap’s platform is built from interest in their powerful audience. Snap provides a deep understanding of their audience, a valuable group who the company estimates to have $4.4 trillion in discretionary spending power. They are also able to de-risk brand investment by offering timely insights around behavioral spending and purchase influence. For example, they recently released data on back to school spending and were able to identify that both parents and students were snapchatters who could be reached with ads. This kind of insight and opportunity sizing is key for brands looking to put their trust, and dollars, into a social platform.
Keeping the Streak Alive
Even with all Snap’s recent victories, it’s never too soon to wonder about what comes next. Snap’s success has largely been driven by persistent innovation. Early on this was done by leading with app features - exclusive filters, their bitmoji partnership, and more. Now, it is increasingly clear that they’re moving beyond just content. They’ve proclaimed loudly that they’re a camera company, not a social network. I would argue they are actually an ecommerce company in disguise.
In addition to battling with TikTok on features, Snap has been very busy in the augmented reality, or AR, realm. They have bolstered their capabilities in this area significantly, including lens filter support, campaign partnerships and brand profiles. Following this, they have recently acquired Fit Analytics, a company that helps users digitally match their measurements to various apparel items while online shopping and provide personalized offers. Brands like Farfetch are already exploring the potential of this kind of technology on the platform. For good measure, Snap has also gone ahead and acquired Screenshop, another application with technology to personalize product recommendations based on uploaded screenshots from users. It’s not hard to imagine the implications these kinds of acquisitions will have on Snap’s advertiser business and the type of AR and ecommerce programs they will soon be able to offer.
New Horizons
If brands are still skeptical of Snapchat’s potential to drive value for their business, that’s ok because Snap isn’t done yet. At the 2021 Snap Partner Summit the company displayed impressive user engagement statistics and announced the launch of their new model of 3D glasses, “Spectacles”. These hardware investments set Snap up to offer very new experiences and value to consumers if they are to get adopted. The possibilities are exciting to consider: AR shopping, drone delivery, virtual events and more. Perhaps Snap is focused more on defining the next era of consumer commerce experiences than keeping pace with the current era of social content. With new products come new challenges (Amazon isn’t going away), but Snap is carving a bold path that continues to differentiate it from peers. I look forward to seeing how long they can keep streaking success stories.
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