Snapchat’s Update and What it Means

By: Michael Duncan, VP of Digital Strategy

On May 1st, Snapchat released their biggest update yet—adding video chatting and text messaging to its popular self-destructing photo and video sharing service.

It’s a notable move for a company that has no revenue, rejected a $3 billion cash buyout from Facebook, and will now compete for market share against recent Facebook acquisition, WhatsApp. In the fifth-largest technology deal ever, Facebook paid an eye-popping $19 billion for the low-cost global text messaging service.

Snapchat logo

In the wake of rejecting Facebook, many tech pundits chastised Snapchat and its defenders for claiming there was potential to monetize the app. Ads, they scoffed, would make Snapchat uncool. “Face it: kids don’t like ads,” they said firmly.

Yet teens aren’t fleeing Facebook because of ads, they’re fleeing and flocking to Snapchat because of privacy.

As a comprehensive study found, teens “are not concerned about commercial use of personal information” but “feel embarrassed” by a platform where their parents and school administrators can like their statuses. Gross.

This tracks with my personal experience with Facebook as well. It wasn’t the introduction of Newsfeed (remember when that didn’t exist?!) or advertising that turned teenagers off from Facebook, it was the rapid expansion first to high school and then the public at-large.

But hey, you have to make money and there’s basically four ways to do it:

1) Subscription fees for the app—Whatsapp
2) Transaction fees for the service—Uber
3) In-app purchases—Candy Crush
4) And advertising—Yeah, like everything

Snapchat has the elusive, and therefore coveted, teen demographic. And thanks to the update, users will be spending even more time in the app, which translates into even more advertising opportunities. New York Magazine reports that teens are “freaking out” over the expanded features of the Snapchat update. One teacher says that in his 16 years of teaching, he’s never seen anything so disruptive.

But they also have something even more elusive in our “hit the X”, “skip to play”, “DVR through commercials” world—the engaged viewer. And this makes advertising truly lucrative.

Users don’t consume media on Snapchat like they do on television, where they’re likely on the couch ignoring commercials and taking a bored selfie. There’s a curiosity factor to Snapchat that transcends other apps because of a message’s 1-10 second lifespan. Point is—users have to pay attention—or they’ll miss out on what their friend is doing right now. It’s basically the ultimate FOMO.

You even have to be engaged with your phone—touching and holding the screen to display the message. This level of user engagement with the screen makes Snapchat a lucrative advertising channel for marketers.

Marketers are already experimenting with brand “Stories and even one-on-one messaging on Snapchat, but there’s been complaints that it hasn’t matured enough to provide business-friendly advertising metrics.

But the possibilities to capture that engaged viewer are compelling. Maybe it’s an interstitial ad that plays before a photo is shared or an exclusive discount at a retailer that can be saved in an “offers” tab in the app by removing your finger or taking a screenshot. The latter would at least be more compelling than the basic promo codes GrubHub is already snapping.

Look, interstitials aren’t exactly groundbreaking. But think about this: the interstitials ads could have variable play times—maybe 2-5-7 seconds—to keep the user guessing and thus unlikely to tune out the ad before receiving that equally ephemeral message from their friend. Can’t tune out of the ad, or you’ll miss the payoff.

With Snapchat preparing to release their API, no not like when it was hacked, it will allow third party applications to integrate with Snapchat.

Who knows where it will go. But I think it’s valuable for marketers as long as Mom doesn’t figure it out.