Where Does Snap Fit, Exactly?
The company is trying to carve out a new ad frontier with Maps and Chat
You don’t hear about Snap being in the streaming wars, or how it’s stealing time from TV.
Nor do you hear about Snap being a competitor to TikTok in the battle for ‘short form’ phone time (even though it invented Stories).
You don’t hear about it as a place for social shopping or product discovery or even the biggest creators.
Or how Snap has tons of identity data that can be used all over the web (even though it does boast of millions of logged-in users).
I thought of this as I was having a discussion with Vayner’s John Terrana last week comparing YouTube and TikTok. Terrana shared a list of attributes that many brands care about in the social/video space:
Scaled consumer attention
Scaled creator content
Integrated check out
Scaled organic distribution of brand content + a solid ad product
Proven success at driving both brand and DR outcomes
In this case, Terrana’s argument is that while YouTube checks a lot of the boxes that brands care about, TikTok is starting to check them all.
Which made me think - which boxes does Snap check?
There was a time when Snap was the hottest company in digital media. It famously had a ferris wheel on the Croisette in Cannes, and you’d read about the app generating 10 billion views per day, making Facebook nervous at the time.
This is not to say that Snap doesn’t matter, or hasn’t pivoted quite smartly over the years, given so many changes in social media, not to mention the severe ad targeting rule changes Apple imposed a few years ago.
After all, Snap reported 460 million daily global active users - and a billion or so monthly, which is not nothing.
“On average, people open up our Snapchat 40 times a day,” said Snap Chief Marketing Officer Grace Kao on the latest episode of Next in Media. “And when we talk about creators, they actually post on Snapchat 140 times a day.”
That is a pretty remarkable level of engagement for an app that has been around for a while at this point. Snap’s recently reported ad revenue climbed 9% year over year to $1.21 billion, though its guidance was uncertain and brand advertising was down.
I’ve been amazed to see my kids gravitate toward Snap in such a big way - figuring it would have already been deemed ‘old’ and very millennial in nature. They love it for its privacy and lack of permanence. Plus, for you youngest kids, we don’t let them on TikTok, so Snap’s Spotlight serves as decent knock-off.
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Snap’s challenge has long been monetizing its large (but still on the young side) user base and engagement. The company’s global average revenue-per-user was recently reported at $2.96, compared to over $11 for Meta, $17 for Netflix (in the US) and nearly $20 for Google.
One performance agency exec told me recently that his clients just don’t ask about Snap very often. Yet the company does seem to have a strong foothold among small to mid-sized advertisers, including game developers; its base of total advertisers has jumped “60% year-over-year” per Madison and Wall.
The opportunity for Snap, as it tries to find its own box to check (and core reason for being on media plans), is to monetize the unique ways people use it.
Rather than original ‘shows’ aimed at capturing TV dollars (which the company has abandoned) Snap may have an opening in chat/messaging, maps, and perhaps AR.
“For many, many years, we have heard that brands are like, when are you going to be able to open up chat as a place for us?” Said Kao. “There's so much activity there. Whether you're a creator or a person, we just want you to share any moment with and feel connected to your community, whether it's family, friends, or even the creators and brands that you love as well.”
There’s no doubt that for its power users, Snap has a strong hold on their communications with their networks. It’s likely why the company is embracing new fangled ‘attention metrics,’ per eMarketer, as perhaps a better way to quantify its value.
But messaging has long proven to be a fraught arena for advertising. Snap is trying to do so carefully. "[This move] really was to open up that opportunity for brands to have a more one-to-one conversation with audiences. And what we learned is that our audiences actually welcome brands and want to have a relationship with brands directly. So chat offers another new surface that didn't exist before.”
Perhaps, but a tricky one. Chat has always been, by nature, private and guarded. How many users want brands in their conversations, or starting new ones? And how many brands want to heavy up on reaching Snap’s young audience?
I will say, Snap has always impressed me with its creativity, and its innovative features. For example, its maps product is huge, and loved by users. Thus, the company has also rolled out Promoted Places, which aspires to go beyond the typical ad for a coffee shop on Google Maps.
Brands can actually show up on the map,” said Kao. “So when people are looking to connect, we're actually offering a place. There's a benefit for the user where they can actually find a place to meet up. And then for brands, that [can be] discovered.”
Kao also mentioned voice memos and AR as areas where Snap is looking to lead. I’ve seen impressive demos over the years of Snap users virtually trying on outfits and such. It’s just not clear how many folks are shopping this way in an instant clip Amazon/TikTok era. Regardless, Snap is sending its virtual shoppers elsewhere.
Still, Kao said Snap sees 300 million AR engagements daily. That, coupled with more AI could become a fertile area of differentiation - and ad innovation.
“When you look at AI tools, what's unique on Snapchat is that we feel that you could, because again, open to camera, you immediately put your audience in as the center of your brand story,” Kao said. “So we have Gen-AI lenses. So you can, as a brand, create a branded experience with AR.”
The question is, will consumers take to that kind of experience tactic in big numbers, and will brands be able to measure their impact. If so, you could see Snap outsourcing this kind of tool to other apps.
To me, Snap would make sense as an acquisition candidate. The question is who. Meta’s messaging ad play is WhatsApp. Google seems unlikely to be acquisitive right now in the face of an ad tech breakup. Perhaps an Amazon (facing antitrust suits of its own), or maybe Apple, which has been muted in its push into advertising?
In the meantime, Snap seems poised to lean hard into its strengths, and try to align those with as many brands’ needs as possible.