Should you be concerned about the future of Snapchat? The answer is both a yes and a no. Yes, you should be concerned as it is somewhat an important part of the digital life and no because it does not need to affect your online presence if you know what to expect.
One of the Fastest Growing
Millions of people use Snapchat on a daily basis and hence, its importance cannot be underestimated from marketing point of view. A platform of such significance definitely catches the marketers’ eye. However, it did not succeed in utilizing this opportunity.
What Snapchat brought was something new. The 24 hour story mode was a unique concept that excited the user and created a sense of urgency. This brought in millions of users. However, now this concept has been introduced by Whatsapp and Instagram as well.
No matter how much advertisement Snapchat invests in to educate the people that they were pioneers of this concept and that others have copied them, the user would not eventually care. Sure, they may agree with this stance but at the end of the day, they want good service which they get from alternative channels. Snapchat service provided an eye catching content unlike others where users may just scroll through without paying much attention to a lot of the shared stuff. Does Snapchat have something that makes them unique and good enough to command customer loyalty? Their chances look very slim at the moment.
Missing Out on Marketers
Snapchat created almost a separate portal for the advertisers where their created content did not mix with the user oriented material. This is not a win-win strategy. It may appear as a win-lose strategy where Snapchat wins and the advertisers lose but in the long run, as seen below, it is a lose-lose strategy. Unless they turn this around and make it a win-win, something like what Facebook has done where the Ads do not appear in a separate dimension, Snapchat is unlikely to benefit much from this stream of revenue.
Huge and Recurring Losses
Snapchat has been suffering from significant losses now and does not believe that it will ever be profitable. This is not just an analysis but a self-admission portraying the ground realities. So, how can a company have 515 million in losses and still be worth 25 Billion? This makes it worth more than Tesco but what makes it valuable? Investors will hope that it will shake off it’s early losses while it grows and mobile advertising becomes more valuable. Snapchat has admitted that it’s slowed it’s growth already but say they have dedicated users that will allow them to make an financial increase. The average opens the app 18 times a day while spending 25-30 minutes on it. Although, they netted a loss, Snapchat did increase it’s annual revenue by 58.6 million from the year before, showing a chance of growth. Is it sustainable though?
Social media platforms are competition to each other even if they produce incomparable content and provide varying services. For example, Facebook also has its own video upload services which competes to YouTube on a small scale. Likewise, Snapchat competes with other social media platforms even if the services are not comparable.
Moreover, the cyber world is a fast evolving place and dynamics change sooner than most expect. The new features from Whatsapp and innovation from Instagram and catering to the evolving needs by Facebook have changed the competition framework. The differences between all these varieties is reducing and may reduce even further. Hence, lack of innovation will only bring decline in the long run and may be sooner than expected.
As an example, let’s take a look at Instagram. It has a much wider reach when you post a story as opposed to Snapchat. Hence, from the marketer’s point of view, Instagram is much better. Collaboration is also something that Instagram has done with Facebook, the powerhouse of the cyber and social media world. This collaboration benefits both of them and provides an ease to the end user but is major threat to Snapchat.
Future of Snapchat
Unless Snapchat acts fast and accordingly, it will continue to decline and end up dead while at the same time having a huge customer base. A large customer base will not help in revenue generation unless the revenue stream is focused on profits and somehow made to sustain and grow.
“With the release of spectacles and a giant rebrand, all the social media experts are looking at Snap Inc. Did we miss something big or is there writing on the wall that we can’t see? Is the future of social media morphing into the wearable tech business? Are spectacles going to be a commercial flop like Google Glass?”
If that is the case then they might have to pack their bags and call it a good run.