Did Snap Just Give Marketers 2.2 Billion Reasons to Put their Dollars Elsewhere?
The sad truth: it’s not easy competing with Facebook.
PHOTO CREDIT: Getty Images
Something happened this week that many weren't expecting: Snap's first quarter as a public company was officially a rocky one. Of course, I couldn't be that surprised, given that this is something I've been advising clients on for the better part of a year: it's hard to compete with Facebook, especially when you're in a defensive stance.
The scene back in March was festive at the New York Stock Exchange, when SNAP became a publicly-traded stock. The company's two founding fathers, Evan Spiegel and Bobby Murphy, rang the opening bell, and the first day the stock did see a nice spike. Fast forward to the end of its first quarter as a public firm, and there aren't as many smiling faces, after a $2.2 billion loss. Which, when you think about it, is actually kind of impressive.
In my role managing Firebrand Group, I've been lucky to advise top-tier brands for years on the future of marketing and communications. It's my job to get the next 36 months right, and to get them right consistently. It's the one thing I'm told I can do well on a consistent basis. While I haven't told clients not to run their high-profile marketing campaigns on Snapchat, I haven't been bullish on the company's fortunes for some time. Here's why.
In a nutshell, Facebook can kill Snapchat on reach. It can kill Snapchat on innovation. And, it can kill Snapchat's efforts to get on offense and think proactively. After all, Facebook has the ability to let Snapchat create a market and then snatch that market away. Before Instagram Stories even launched, Firebrand Group was able to go on record as predicting that Facebook would continue to ape key Snapchat features, which would see adoption by large swaths of Internet users. Once Instagram Stories launched, it became clear: this was a Snapchat-killer of a feature. Users began seeing that they could do the same exact activity on both platforms - post a short video with filters and captions - and get better engagement on Instagram than on Snapchat.
"Snapchat was on the rise in 2016 because they had no competitors who were able to capture their magic," says Jason Keath of Social Fresh. Keath's a noted social media scholar - enough so that I begged him to partner on our upcoming Innovation Congress together. He agrees that Snapchat lost its darling status when Facebook decided to compete directly with Snapchat features. "Instagram has not only stolen Snapchat's mojo, they've improved on it in many ways," says Keath.
Speaking of mojo, momentum is a key factor for any social platform - something Facebook noticed in 2015 and had to bounce back from in 2016. Some marketers have noticed that Snapchat is going through those same growing pains, but at the exact wrong time. "People are going to start to see the shine rubbing off of Snapchat, says Gabrielle Archambault, Senior Manager of Social Media for eos Products. "It's no longer the shiny new social network everybody is running to join."
If consumers aren't running to join, that's not a good sign for advertisers, who are key to Snap's future - and this is where things get even trickier for the startup. Of course, Snapchat is a fantastic platform to reach a number of key, highly sought-after demographics. However, Facebook, Inc. has multiple properties where advertisers can reach consumers: Facebook and Instagram. While Snapchat is certainly far from dead, going forward, Keath advises brands to look at the platform as a Millennial chat app and niche social network as its ability to compete directly with Facebook or Instagram has been greatly diminished.
As another important aside: Facebook's Messenger product, shrewdly spun off as its own property, serves as another key competitor for Snapchat. While Facebook hasn't really monetized Messenger yet, it has created another way for Internet users to connect with one another. Believe it or not, there are plenty of people who say they hate Facebook yet user Messenger plenty. The fact that these are owned by the same company doesn't seem to bother these people - but it should bother Snap, considering that Messenger and its new Messenger Day feature has put Snap on the defensive.
Of course, if you own shares of SNAP, it's not all bad news. "Snapchat still has a unique, in-the-moment social foundation that appeals to many, especially digital natives and Millennials," says Abby Whitmer, Director of Global Digital Marketing at Mary Kay Cosmetics. Likewise, Jason Keath cites Snapchat's recent commitment to short-form TV style programming as a potential opportunity for the platform. He's right in one sense: Snap needs to figure out not only things that will bring in revenue, but things that Facebook simply won't do because it goes against Facebook's game plan. It's not enough to create interesting features that Facebook can replicate, and replicate easily.
The question will be: can Snap find "blue ocean" opportunities to innovate that Facebook won't jump on? That's an open question, and a very tall order for Spiegel and Snap's leadership.