Snapchat must do more to prove its worth to brands in the wake of its IPO filing, as marketers say the platform is too restrictive and fails to cater to a mass audience.
On Friday (3February), Snapchat filed for a $3bn IPO. In it, the company admitted it faces challenges convincing advertisers over the veracity of its ad business. And marketers agree, saying Snapchat needs to offer something more than its competitors and deliver to a wider audience.
The filing highlighted that while revenues came in at $404.5m (£324m) last year, up from $58.7m (£47m) in 2015, its net loss widened to $514.6m (£412.2m), from $372.9m in 2015.
Snapchat itself said advertisers “may view some of its products as experimental and unproven”, but the problems don’t just stop there.
Despite Snapchat’s vice-president of content, Nick Bell, declaring Snapchat’s audience is not as young as people think, marketers are failing to get the memo.
“Snapchat remains a bit of an enigma for many people over 25. I think this is changing but potentially not at the rate we’ve seen with other channels,” says Angela Bertram, senior social media and content manager at Dixons Carphone.
Moving beyond the under 25’s, a “key blocker” to more brands using Snapchat is the user interface and the process to build a community in the app. Instagram already has a bigger community and prompts users to follow friends from their Facebook community so users feel like their content is being seen by a wider audience.
Snapchat also has to deal with the fact that its stereotype of having a younger demographic is not only putting marketers off but that this specific audience is not easy to get money from.
Brands including Skoda and Made.com don’t even use the platform yet, with Skoda saying it hasn’t come up in its thinking yet.
“We’ve honestly not given it [Snapchat] much thought yet. Like all these things, they are all to be thrown into the mix. If it is right for the objectives at the time, who knows?” says Kirsten Stagg, head of marketing at Skoda UK.
Bill Fisher, senior analyst at eMarketer puts this lack of focus down to Snapchat’s user base.
“Until Snapchat can grow its user base outward from these core demographics, it may find it hard to prove its credentials to anyone other than the brands looking to target young consumers,” he explains.
Snapchat remains a bit of an enigma for many people over 25.
Angela Bertram, Dixons Carphone
Brands including L’Oréal and media agency WPP are increasingly using Snapchat. WPP claims it spent $70m with Snapchat last year, while L’Oréal has worked with Snapchat to create sponsored filters, including its L’Oréal Paris Clay mask filter which it says resulted in some “impressive engagement”.
Yet that $70m figure is some way behind the hundreds of millions it spends with Google and Facebook. And L’Oréal says the platform needs to make sure brands can reach different audiences.
Snapchat is also at risk of falling behind its competitors. Samuel Budd, commercial director at social media marketing agency Social Chain, says Snapchat has missed a trick in making it easy for audiences to connect with their favourite brands.
“When we compare Snapchat and Instagram and the impact both are having across our own communities, it is clear to see that Instagram is continually delivering far greater results for our clients,” he says.
Budd puts this down to the fact brands and consumers already have large followings on the platform. Instagram has recently matched Snapchat’s 150 million daily users, in just six months after launching its Instagram stories feature.
Instagram’s move to stories is not the first time Snapchat has been threatened by social platforms copying its features. Smaller platforms including Snow and Musical.ly have adapted stories features and Instagram has now moved to live stories and ads in stories to compete with Snapchat.
As a result Snapchat needs to remain innovative and provide marketers with their desired target audience, to push itself to the forefront of marketers strategies and in turn benefit from their budgets.
Source: Marketing Week
Snapchat needs to prove it has mass appeal