A. Snap’s Messaging Service
Snap’s services to its consumers are differentiated compared to its main competitors,
allowing consumers to share pictures and videos that “expire”, customizable with
various types of lenses and filters. While the expiration of pictures and videos is unique,
it also poses a challenge for Snap because Snap is the only social media platform that
does not offer a dedicated user page (users’ account pages where all photos, images,
and videos are shown without disappearing) when all its main competitors do.
Combined with the fact that other competitors such as Facebook, Instagram, and
Twitter also offer direct messaging services between their users, Snap cannot be
considered as a “complete” social media platform. Facebook and Instagram also offer
another dimension of user community through an online marketplace, allowing users to
buy and sell products and services. Naturally, more users will be attracted to these
complete social media platforms that offer full range of services to consumers, as
shown by number of users (e.g. Snap: 187M, Instagram: 800M) . In this regard, Snap
must make a decision whether to keep its service as a niche appeal to lower number of
users or widen its breadth of services to appeal to larger number of users.
Pictures
Videos
Stories/
Shorts
Contents
Expire
Dedicated
User Page
Direct
Messaging
Marketplace
Snap
✓
✓
✓
✓
x
✓
x
Twitter
✓
✓
x
x
✓
✓
x
Facebook
✓
✓
✓
x
✓
✓
✓
Instagram
✓
✓
✓
x
✓
✓
✓
YouTube
x
✓
✓
x
✓
x
x
B. User Growth
While user growth has been explosive when Snap first launched with 36% and 26% Y/Y
growth in 2016 and 2017, the interest level has dwindled significantly with growth
expected to slow to less than 10% in 2018. The % of monthly active users out of total
user base is also tracks low at around 40% compared to almost 90% for Facebook,
signalling low user engagement. This can be mainly attributed to two aspects: 1)
usability and quality of Snap’s services and 2) competitors offering similar services. With
respect to usability, since the redesign of app’s interface, Snap’s users have been
severely frustrated with 74% finding the new updates “awful” according to a recent
survey. Furthermore, Snap’s new service Spectacles is also critiqued with quality and
usability issues. In terms of competition, users are not finding Snap so unique any
longer as competitors like Facebook and Instagram introduced stories that expire along
with direct messaging services. These services satisfy many of the needs for Snap’s
users, directing them away from Snap. Snap must address these two issues to regrow
its user base and improve user engagement.
C. Advertising Trend
Due to uniqueness of its consumer offerings, Snap offers distinct variety of products
available to advertisers, such as sponsored lens, sponsored geofilters, and Snapads.
However, Snapchat is at the bottom of the list in terms of preferred choice of social
marketing platform, standing at a mere 2% of social marketers choosing Snap as a top
three platform choice. Market share in terms of advertising revenues is also at the near
bottom at less than 1%. Despite these shortcomings, Snap has potential to attract more
high-profile advertisers as evidenced by recent successes in Gatorade ad (30 million
downloads) and Taco Bell sponsored lens (224 million views). If Snap finds a way to
attract more users and enhance engagement, advertisers will naturally be more
attracted to Snap’s offerings.
Recommendation
As noted in above sections, Snap should look to attract larger user base as well as
heightening user engagement. To attract larger user base, Snap should look into adding
additional dimensions to its platform to become a true social media platform, instead of
remaining as a messaging service provider. They could potentially do this by adding a
dedicated user page for each user, much like Facebook and Instagram. For example,
Snap users can highlight or pin their favorite Snap moments in their dedicated pages
without having them expire. In terms of heightening user engagement, Snap should first
take time to thoroughly understand customer pain points in terms of user interface, new
services offered, quality of lens/graphics, etc. and act on these pain points to improve
usability of its existing services. Specifically for new services, Snap should listen to its
customers first before investing large sums of money on expensive acquisitions such as
Zenly. Once Snap is able to satisfy existing and attract new users, opportunities for
advertisements would naturally follow through variety of advertising products that Snap
offers.