Narrative: Snapchat is Maturing

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    Snap plans to publicly file for its much-anticipated IPO late next week – Recode (Jan 27, 2017)

    I’m so looking forward to this filing being made public – it’s always a lot of fun to suddenly be able to dive deep into a formerly private companies finances and metrics. I’m very curious as to what they show and I’ll certainly write an in-depth analysis when I’m done investigating. The things I’m most interested in are revenue run rate and profitability. Snap has been trying to get commitments from media buyers to spend more in 2017, but I’m not sure there will be any evidence of that in the filing, which will typically be backward- rather than forward-looking. I’m assuming Snap isn’t profitable, but just how profitable and what the trajectory looks like there are big questions – Twitter famously still isn’t profitable several years after its IPO, while Facebook is one of the most profitable tech companies out there, so this is another area where Snap will want to demonstrate it’s more like the latter than the former.

    via Recode

    Snapchat NYC Spectacles store is mostly empty – CNBC (Jan 26, 2017)

    Snap’s foray into hardware coincided with its new company name, and the marketing strategy for the Spectacles was genius – very short supply combined with a sales model that made availability even narrow by focusing it on single vending machines that moved around, combined with a single permanent store in New York City. However, it’s becoming apparent now (if it wasn’t obvious from the start) that Spectacles aren’t going to be massive sellers. Yes, hundreds of people lined up early on to buy them, but the crowds have now disappeared. I’m somewhat surprised Snap hasn’t put Spectacles up for sale anywhere else yet – it’s still basically impossible to buy a brand new pair at list price unless you live in or visit NYC or happen to be in one of the other places where the moving machines have turned up. That suggests, though, that this move into hardware was more experimental than strategic, and raises the question of whether we’ll see more of this from Snap in future. There’s certainly potential for some interesting new functionality around AR in future versions, but there are few indications at this point that Snap has any big plans.

    via CNBC

    Snapchat Is in Talks for Big Ad Deals Ahead of IPO – WSJ (Jan 25, 2017)

    Another day, another story about Snap trying to grow its ad revenue, this time focusing on getting up front commitments from major ad agencies’ ad buying arms. Given how nascent Snap’s ad business is, convincing potential investors that it has a predictable run rate for ad spend is critical to a successful IPO, so getting some promises from major buyers to increase spending in 2017 would be a useful first step. But of course that increased spend will only come if the ROI is there, which has been the other piece of this puzzle for Snap over recent months, trying to demonstrate that advertising on Snapchat can be more than just speculative.

    via WSJ

    DCN report shows publisher revenue from Google, Facebook, Snapchat – Business Insider (Jan 24, 2017)

    This article (and the report it’s based on) frustratingly focuses on average numbers across a range of very different publishers, rather than providing something more detailed, which limits the usefulness of the data, but there’s some interesting stuff in here regardless. For one, this reinforces the sense that publishers are between a rock and a hard place when it comes to supporting the major new content platforms – on the one hand, they feel they can’t afford to be absent, and on the other systems like Facebook Instant Articles and Google’s AMP don’t seem to allow them to monetize as they do on their own sites. One surprising finding is how strongly Snapchat shows here relative to its overall share of ad revenue. The picture is muddied by the fact that the report covers both video and news content, and so YouTube makes a very strong showing overall too. The key takeaway for me is that these companies continue to tread a difficult and dangerous path as they work with these platforms, ceding a lot of control to them and potentially seeing less revenue as a result.

    Update: the actual report is now available here in full.

    via Business Insider

    Snapchat Discover Takes a Hard Line on Misleading and Explicit Images – The New York Times (Jan 23, 2017)

    There’s a certain irony in the fact that Snapchat is now trying to remove some of the lewder images from its Discover tab, when its early reputation (somewhat undeservedly) was that of an app that existed specifically so that users could send each other such images of themselves. But this is the sort of thing we see as apps and services that have been allowed to run relatively unfettered begin to ramp up efforts to court advertisers in preparation for an IPO, which is exactly what Snap is doing. Cleaning up the Discover tab should provide some more comfort to advertisers about the context in which their ads will be seen, though there’s nothing in these guidelines about racy images that are relevant to the Stories behind them, which I’d say many of the images I see in the Discover tab arguably are. The other side of this effort could be increased user controls around the content they see on the Discover tab, since some users would prefer not to see those images or the Stories behind them at all – balancing the needs of publishers, advertisers, and users is always the hardest balancing act for any ad-backed business.

    via Snapchat Discover Takes a Hard Line on Misleading and Explicit Images – The New York Times

    Snapchat Is Justifying Its $20 Billion Valuation by Emphasizing User Engagement – Bloomberg (Jan 20, 2017)

    This is in some ways part of the same story we heard a while back about Snap positioning itself as another Facebook rather than another Twitter.  Facebook is all about engagement, providing numbers on not just monthly but daily active users, and talking up time spent as well. Though Twitter briefly dabbled with metrics like timeline views as an indicator of engagement, it quickly abandoned that metric and has steadfastly refused to provide daily active user numbers, focusing instead on MAUs and directional rather than absolute measures of engagement. Snap clearly wants to avoid those associations with Twitter and so has provided to investors data on engagement across several dimensions, which will hopefully be made available in its S-1 filing when that’s made public too. A key part of the Snapchat value proposition is that its users spend a lot of time on the service, so proving that to investors will be critical.

    via Snapchat Is Justifying Its $20 Billion Valuation by Emphasizing User Engagement – Bloomberg

    Your real-world purchases will soon determine what ads you see on Snapchat – Mashable (Jan 19, 2017)

    Here’s further evidence that Snap is evolving Snapchat’s advertising targeting capabilities, something it badly needs to do to ramp up ad spending ahead of a potential IPO. But that also means going back on some of the commitments Evan Spiegel has made in the past to avoid “creepy” targeting. The reality is that Snapchat has captured a nice little share of ad spending purely on the basis of having a great target market for a certain generation at a general level, but if it wants to capture more targeted advertising, it needs to provide the tools that Facebook, Google, and others already provide. That means buying in data from Oracle (as in this deal, and further to a previous deal with Oracle for measuring ROI) or other data collection houses (as Facebook already does) in order both to target advertising and to capture information about subsequent purchases to prove an ROI. Though Snapchat’s target market is generally more open to ad-based business models and the attendant privacy implications, there’s a point at which even millennials will balk, and Snap has to be careful not to cross that line.

    via Your real-world purchases will soon determine what ads you see on Snapchat – Mashable

    Ad spend on Snapchat by clients hit $90 million in 2016: WPP CEO – CNBC (Jan 18, 2017)

    One of the big challenges for Snap ahead of its IPO is ramping up advertiser spending from experimental to more serious levels, and WPP is one of the biggest funnels through which those ad dollars flow. $90 million is three times what WPP expected its clients to spend on Snapchat at the beginning of the year, but of course it’s a tiny fraction of what those clients spend on Facebook and Google. Getting advertisers to spend more means providing more of the tools and analytics other large online ad platforms provide, and Snap has been somewhat resistant to that approach, although it appears to recognize the need to evolve on this point going forward.

    via Ad spend on Snapchat by clients hit $90 million in 2016: WPP CEO – CNBC

    Can Snapchat’s Culture of Secrecy Survive an IPO? – Bloomberg (Jan 17, 2017)

    It’s an interesting change to see a story like this written about a company other than Apple, which is usually the focus of articles about obsessive secrecy. Snap is of course a private company at this point, and so has had to share very little about its business with very few people, but that will all change with its IPO, so it’s going to have to get better at divulging at least some things to its investors. On the other hand, I always feel like the media likes stories about how secrecy makes things harder for companies – perhaps because it makes things harder for reporters – and yet there’s very little evidence to back up the claim. Some of the best companies are the best at keeping secrets about their products, precisely because they want to control the narrative when the products are ready for release, rather than have others write the narrative for them based on leaks and rumors.

    via Can Snapchat’s Culture of Secrecy Survive an IPO? – Bloomberg

    This is not a drill: Snapchat is about to get a major redesign – Mashable (Jan 12, 2017)

    It’s always seemed almost a point of pride with Snapchat that its user interface is unintuitive and hard to navigate, so it’s a bit surprising to see it engage in such a significant redesign of its app. But this may well make the app less intimidating to new users who’ve been put off by the previous arcane user interface, which may be an indication that Snap wants to broaden the appeal of its app beyond its current target market.

    via This is not a drill: Snapchat is about to get a major redesign – Mashable