This article originally appeared in the August 2016 edition of the Marketing GPS Newsletter.
My radio guest Friday on the Marketing GPS Challenge Hour was high-school disk-jockey (and millennial) Alex Barron. We talked about entrepreneurship for immigrant families while he casually “snapped” a Snapchat video of us recording the show in our studio.
Alex is one of Snapchat’s more than 100 million daily users who collectively spend an average of 25-30 minutes on the app each day. It was easier than posting to Facebook, so Alex uses Facebook to keep in touch with old friends from Colorado, but Snapchat to keep up with everyone at his new home in Texas, where he moved just as SnapChat was gaining prominence. And he uses Snapchat, not Facebook, to get DJ gigs for his side business while he finishes high school and makes college plans.
Mark Zuckerberg’s 2012 Discovery
Four years ago, before Alex’s move, Facebook founder and CEO Mark Zuckerberg took note of Snapchat which at the time earned no revenue, but featured a unique content self-destruct feature in which photos disappeared after a short time frame. This feature was so unique, in fact, that critics, including me at the time, couldn’t imagine any particular use for it outside of sexting, and many of us condemned the app accordingly.
Mark Zuckerberg, though, saw something much more and committed to two actions: first, create his own better-funded rival, an app called Poke, and—after that was ready to launch—interview Snapchat founders Evan Spiegel and Bobby Murphy to see if there was anything more he could glean from their vision.
The Snapchat pair seems to have played their modest hand well, according to J.J. Colao’s account of their brinkmanship in Forbes. They didn’t even lose money on airline tickets, insisting that their seeming suiter fly from Facebook’s Menlo Park headquarters to Los Angeles where he arranged for a private apartment for the furtive face-off. And, like a movie cliché, right after Mark Zuckerberg laid down the gauntlet by announcing Poke, they used some of the savings to buy copies of Sun Tzu’s The Art of War for each of their six employees.
The Forbes account reports that after an initially promising December 21 debut, Poke (a “near-exact copy” of Snapchat according to Bobby Murphy) unexpectedly flopped, while its original inspiration enjoyed a PR-injected growth spike.
…A funny thing happened on the way to obsolescence. The day after its launch Poke hit number one on the iPhone app store. But within three days, on Dec. 25, Snapchat had pulled ahead, boosted by the publicity, as the Facebook app disappeared from the top 30. Laughs Spiegel: “It was like, ‘Merry Christmas, Snapchat!’
Which helps explain what happened in the fall when Zuckerberg reengaged Spiegel, basically ready to surrender on terms so generous, on paper, they seemed preposterous: $3 billion in cash, according to people familiar with the offer, for a two-year-old app with no revenue and no timetable for revenue.
Snap Forward to 2016
Snapchat is today’s TV. According to AdEspresso, up to eight times the amount of Americans aged 13-24 watch live stories of an event on Snapchat than on television, and more than 10 billion videos are viewed on Snapchat each day, rivaling both Facebook (with 8 billion daily video views as of its last reporting in November) and YouTube (which ceased reporting daily video views in 2012).
But this TV has hundreds of millions of channels because the app is not just for watching TV, but for broadcasting (or at least narrowcasting) your own station. Unlike Facebook and more like GoPro, the first screen of the Snapchat app is a camera entreating users to produce and share content, either to specific friends, where it disappears as soon as it is viewed, or to a broader audience as a Snapchat story that expires after 24 hours.
That’s the self-destruct feature in action, meaning there’s not as much work to “maintain” your profile on Snapchat as there is on Facebook. Managing an idealized online identity has “taken all of the fun out of communicating,” according to Evan Spiegel. Your videos last only about as long as your moods. You can point your Snapchat-enabled camera at anything, feeding your audience a steady stream of content and authentically capture whatever emotions you might happen to feel at the time without worrying about how one awkward moment might reflect on your entire online persona.
In 2014 researchers from University of Washington and Seattle Pacific University surveyed Snapchat users and found their results ran counter to their original hypothesis that the ephemeral nature of Snapchat messages would predominantly drive privacy-sensitive content. In fact, only 1.6% reported primarily sexting, while 59.8% reported primarily sending comedic content such as “stupid faces.”
This use of technology taps into and shapes our evolving video culture. According to Robert Peck, an analyst with SunTrust Robinson Humphrey, “conversations are not only including a photo or video, but are being started by them. People’s behavior is changing so that photos are being used as speech instead of a repository for memories.”
Photos—like paintings before them—were once very expensive, labor-intensive ways to communicate, but now photos and videos are ubiquitous, cheap and easy. So as email supplanted phone calls, and texting and posting have supplanted email, viewing is replacing reading. Snapchat is at the forefront with an easy-to-use app and now a $20 billion valuation, more than six times Mark Zuckerberg’s not-quite-prescient-enough offer.
In fact, in the time it’s taken you to read this article, over 1.5 million new snaps have been sent. While we plan to continue a written newsletter until at least search technology incorporates better image recognition, the percentage of information NSI conveys through video in contrast to other channels has grown dramatically in each of the past few years.
Snapchat is Easier, but Does It Make More Money?
Snapchat began monetizing on October 19, 2014 with a 20-second movie trailer for the horror film Ouija. Ad placements can appear within a live story, or sponsors can pitch their own stories. Snapchat’s “Discover” feature accrues revenue from publishers and advertisers alike who present short-form content. June 2015 brought sponsored geofilters for snaps to decorate snaps based on location, and October marked the start of sponsored Lens filters which decorate snaps based on a theme.
All of this adds up to a targeted $300 million in revenue this year with sights set on $1 billion in revenue next year according to Snapchat projections. For how your organization can capitalize on all of this, read Snapchat is Easier than Facebook, Part II in next month’s issue of Marketing GPS.