Snapchat's Going Public

Sept. 22, 2020 |  Categories:  Snapchat   Social Media  

Snapchat is making public content viewable outside of it's app
If you were Evan Spiegel, CEO of Snap, how would you grow the company's revenue and become profitable? From the quarter ending March 31st, 2018 through the end of Q2 2020, the company has reported a net loss in every quarter with the average being a loss of $0.216 per share per quarter. What's a CEO to do?

Luckily, there's plenty of competitors to look to. Snap currently sits within the Interactive Services and Media industry segment along with public competitors Facebook and Twitter. The company also tends to get compared with other social platforms like TikTok (owned by ByteDance) and Instagram (owned by Facebook).

Despite there being many competitors, the evolution of each platform has had it's own unique aspects. Earlier entrants like Facebook couldn't employ the same growth tactics as newer entrants like TikTok and each platform tends to serve a unique niche for their users. Facebook serves the legacy, pre-smartphone era, trying to capture all facets of social interaction; Twitter focuses on sharing the quick update or idea. Instagram allows you to share your photos widely; Snapchat focuses on temporary, fleeting content; and TikTok focuses on discoverability.

The ability to share content across the web is nothing new. One of the foundations of the internet is the ability to link to other pages so that you can move between different sites, read different pieces, and writers can cite sources by linking directly to them. In the age of social media and apps though, that has changed. Not every piece of content has a direct link, but most platforms allow content that is created or posted on their platform to be shared and embedded on other platforms and webpages.

One notable exception has been content created and shared on Snapchat. It makes sense; the app's foundation is disappearing, private photos, a bid to add some ephemerality to the very permanent nature of the internet. If you're sharing something privately, you don't really need or want a permanent, public link to it. The fully private strategy started to change when the company invented Stories though, which allow users to post semi-public or fully-public photos and videos that last 24 hours. The app continued to move away from a fully private platform with the creation of the Discover page which allowed brands and content creators to publish content to all users of the app. Last year, it also began to allow users to share certain types of stories outside of the platform.

This week, Snap seems to be taking another step in the direction of more public, permanent content by announcing that they will test the ability for users to share more public content outside of the app. The expanded sharing feature now allows users to share content that isn't their own outside of the platform, including original shows, content from Discover partners, and celebrity snapchats.

Twitter was one of the first social platforms to lean into opening up it's platform so that tweets could be embedded on other sites. The company launched their embed feature in 2011. The feature allowed users to paste an embed code that displayed the content of the tweet with a design that ensured that people would know it came from Twitter. It allowed journalists and bloggers to add the content directly to their articles in a way that readers would know that the content came from Twitter. The hope being, that people would see tweets around the web, in articles they were reading, and be intrigued to sign up for the platform.

Fast forward to today and TikTok has centered their growth strategy in the U.S. around sharing content on other social media platforms. The company spent nearly $1 billion on ads in 2018 mostly on competitive platforms like Snap and Instagram. The ads featured videos that were generated on the TikTok app, but exported with a small TikTok watermark in one of the corners. The idea was that people seeing the video, be entertained, and would get curious enough to search for TikTok, either on Google or in one of the app stores to find the app. The strategy worked with usage in the U.S. growing 5.5x from October 2017 to March 2019. The app has captured the coveted 18-34, Gen Z and younger Millennial demographic. The hope is that with young adults using the app, older generations follow as they hear their younger friends, kids, and grand kids talk about content they see or produce on the app.

Leveraging those connections between generations is really how Facebook grew to 2.7 billion monthly active users. The website started targeted at college students only at select universities (a subsection of the coveted 18-34 demographic). From there, the company gradually grew it's users base to more universities, high school students, and eventually broader and broader audiences across the U.S. and the globe. While Facebook didn't quite have the benefit of having mature social platforms to advertise on and share it's content on, it did open up it's platform to allow Facebook posts to be embedded on websites in 2013, which continued to fuel it's growth as well. Similar to Twitter, Facebook posts could be shared in articles or on other webpages with a design that drove interested people back to Facebook, where they would hopefully sign up for an account if they didn't have one.

I'd be remiss if I didn't also talk about Instagram. The app was the first to gain traction despite competing with Facebook and Twitter. Notably, they were also the first to have access to those platform in order to fuel their growth. The company employed a strategy that really embraced the other platforms in a way that got them to where their audience was. One of the key features of Instagram in the early days was the ease with which you could share photos to Twitter and Facebook when you posted them to your feed. This allowed you as a content creator to get more engagement but also drove discoverability for Instagram and drove more people to download the app. The company definitely wasn't going so far as to buy ads for content on competitive platforms like TikTok, but it did take advantage of the fact that established social platforms were out there. The feature was so core to creators experience on the platform that when the company eventually stopped allowing photos to appear on Twitter, it was a major piece of news and a lot of people were outraged.

Snap, rooted in private, ephemeral content, has long avoided allowing the content that lives on their platform from being shared outside of the app. However, this recent move to allow users to grab content links for sharing on other platforms and websites could drive more user growth for the company. It opens up the possibility for people to share content from the platform and talk about what's going happening on the platform - what are people talking about and what are the news worthy pieces.

Allowing content to be shared more places, to gain eyes and curiosity isn't a bad strategy if executed correctly, and it's been employed by some of the largest platforms including Facebook, Twitter, Instagram and TikTok. I'm not saying that this is the only way that Snap can grow revenue and monetize their platform, but they are taking a similar step that has worked for it's competitors.