I’ll admit it. Hell, I’ll say it with curmudgeonly pride: I don’t get Snapchat. Though the number of thirty-somethings who regularly use the app is large and growing, I, and many others, remain staunchly in the “not for me” camp. The fact that I’m an older Millennial who came of age before sexting became a rite of passage–and who married, and sired a child (mostly on purpose, and not necessarily in that order)–before Snapchat was ever born, is perhaps one reason I missed the bandwagon.
The infuriating concept of creating content only to see it automatically destroyed is another; I still have legal pads filled with offensively bad writing from my high school years with which I refuse to part.
But the bandwagon has gotten huge, and the company is worth billions according to the venture backers who keep throwing cash at it…and the 150+ million daily active users, the ad revenue estimated to reach close to $1 billion in 2017 alone, and the new hardware that was just rolled out and is selling as fast as Snapchat cares to make it available…
So I am forced to ask in true curmudgeonly fashion: what the fuck happened? The answer is: a lot.
Snapchat Isn’t Just About Self-Deleting Dick Pics (Anymore)
Launched in 2011, the concept behind Snapchat was simple: give people a way to send messages and photos (and later videos) that self-destruct after viewing, so people can communicate without fear of having their perfect social media personae, or actual social lives, forever tarnished. It offered social sharing with privacy, which the founders believed would lead to more authentic and natural interactions than platforms like Facebook, where everything is preserved for all time.
Of course, “authenticity” quickly gave way to “nudity,” which is all well and good for consenting adults who want to look at naked pictures once only for seven seconds (it being so hard to find longer-lasting naked pictures online). Such a trend, however, proved somewhat problematic for the younger demographic. Snapchat has been involved in at least one high-profile criminal case involving underage nudes, and the company felt it necessary to address the issue in it’s “What not to Snap” guidelines:
Nudity or sexually suggestive content involving minors (people under the age of 18)
- Never post or send any nude or sexual content involving people under the age of 18 — even yourself.
- This includes adding drawings or captions to a Snap to make it sexual — even as a joke.
But as fun as it is to deride Snapchat as an app built for hormone-addled adolescents, there’s more to the company than that. Snapchat encourages people to get playful in entirely non-sexual ways, through various filters and add-ons that make your face look all kinds of kooky. As ludicrous as it seems to many of us, that is just one of many innovations that has clearly helped Snapchat reach a wider audience of fun-loving moro–er, I mean good old average Joes.
As of September, Snapchat was boasting 60 million daily active users in the US and Canada, and more than 150 million DAUs worldwide. If they have designs on global domination, they’re off to a good start.
Forward Motion & The Marketing Machine
It isn’t just users that they’ve captured, either. Advertisers and content marketers have been warming to the app in a big way over the last year and a half or so. Much of this is due to other changes Snapchat made in its messaging platform, like adding the “Stories” feature in 2014. Stitching together pictures and videos to create a Snapchat “story,” which is available to friends for a whole 24 hours, quickly became more popular than individual and fully private “snaps” between users, and also gave brands a new way to reach their ideal consumers.
The addition of Snapchat Discovery in January of 2015 gave content creators, large and small, a way to reach new audiences without adding Snapchat “friends,” and vastly opened up the advertising possibilities of the platform as a whole. Brands can use Snapchat in a growing number of ways, from snap-like ads embedded in selected Discover channels, full-channel sponsorship, or even sponsored filters and lenses.
Influencer marketing is also growing like gangbusters, and brands are paying top-dollar for top Snappers (can we call them that?) to take over their channels or lead Snapchat-based events. The ROI for these brands seems strong, too—and measuring influencer marketing ROI is all the rage these days—so no doubt Snapchat will figure out a way to capture a chunk of the influencer revenue currently bandying about on its platform (though they’re likely jazzed enough to just have marketing budgets driving more usage and adoption as a whole).
Snapcash is another innovation on the platform; it allows users to exchange money with other Snapchat users as long as they connect a debit card to their account, opening up the possibility of Snapchat as a direct purchasing platform, or just a much-needed dead-simple way to make digital transfers between pals.
This year the company made major strides in providing more detailed demographic information to advertisers, which some see as a major cultural shift away from the philosophies espoused by founder Evan Spiegel in the past. The company still collects and reports far less user data than Facebook, and though reports on reach and views have grown better (with some controversy in the way Snapchat measures them), true ROI on Snapchat ads is still notoriously difficult to determine. Surprisingly, advertisers don’t seem bothered by that.
Money, It’s A Gas
Investors have shined onto Snapchat like stink on shit, with Crunchbase estimating that the company has raised $2.63B in funding over eight rounds. Spiegel even famously turned down a $3B cash offer from Facebook in 2013, after a personal meeting with Zuckerberg. This was back when Snapchat was still pre-revenue and with no clear plans for generating any.
That has certainly changed; recently leaked documents revealed that the privately-held company is likely to make over $350M in ad sales this year and is projected to make more than twice that next year. Microtransactions that allow users to replay snaps have also added to the company’s coffers, albeit minimally.
I might not understand why it’s successful; I might not think there’s enough “there” there that it should be successful; but there’s no denying that it is successful in a major way. And here’s the thing: they’re nowhere done evolving.
Late last month, Snapchat—now rebranded as Snap, Inc.—made a confidential filing for an IPO. The confidential option is only available to companies with revenues (not profit, but revenue) under $1B, and yet initial estimates suggest the company will hit the market with a valuation of more than $20B. Given the way Snapchat has defied the odds (and common sense) so far, it’s entirely possible that the valuation could go even higher–some have been predicting up to $40B.
Soft Or Hard?
Part of this may come down to the company’s most recent pivot. Snapchat the app is still around and it ain’t going anywhere. Snap, Inc., however, is calling itself a hardware company and has recently started selling smart glasses—dubbed Spectacles—at unmanned vending machines dropped in secret locations around the world. The machines are delivered “secretly” and their location is announced on spectacles.com. When a machine runs out of the $130 specs, there are no more until the next drop is made in another location (one machine, the sole occupant a storefront on 59th Street in Manhattan, just across from the Apple Store, is going to remain in place and continually restocked through the holiday season).
The scarcity marketing technique is definitely bolstering the company’s cachet among existing users, and is giving the rest of us yet another reason to scratch our heads and wonder just what the fuck it is about Snapchat that manages to capture so much attraction. Though they’re relatively affordable and have a solid camera and impressive battery life, Spectacles only work with Snapchat and can only capture ten seconds of video at a time. If you already love the Snapchat way of doing things you’re probably going to want a pair, but if you weren’t into it before, you’re hardly likely to be converted by the this product hardware.
When it comes to its IPO, though, it’s interest from brands, advertisers and agencies that has Snap, Inc. all abuzz. Glasses will make the app that much more sticky, and will likely increase logins and user activity; whether that will translate into additional exposure and revenue is something both advertisers and investors are sure to be watching closely in the coming months.
The user numbers, the cash flow (keep in mind too, they only have a few hundred employees), and the investor excitement seems to be proof that Snap, Inc. is the real deal; an honest to God unicorn at a time when they were supposed to be extinct. And in a year where very little seems to make sense, I want to believe that Snapchat isn’t as insane as it appears from the consumer perspective. With people helicoptering to the Grand Canyon to buy the brand’s specs, though, I’m going to remain stubbornly—and curmudgeonly—on the fence.
I mean, the Internet is just a fad too, right?
