Yes, there is an issue, yet is it a real one? The LA Times (at http://www.latimes.com/business/technology/la-fi-tn-snap-earns-20170810-htmlstory.html) gives us ‘Snap shares plummet after Los Angeles tech company misses expectations‘. Now, there has in my view always been an issue with “frustrated financial analysts and investors by adding new features for advertisers too slowly“. You see, there are two issues right there. In my personal view, I have always sided with the ‘premium‘ edition of pretty much any app when the price is right, to avoid advertisements and I will dump any app the moment that there is a replacement app offering such an option. So with ‘new features for advertisers‘ I will instantly snap to another app at the drop of a hat, any hat. You only need to Google: ‘Snapchat’ to see the impact, anger and frustration the users offer (loudly). So when I see “Snap hasn’t delivered promising results in its first two earnings reports” I am not at all surprised. In my view what was a great idea was suddenly bombastic and radioactive. So when the option “and Snap [at 173 million daily active users] can’t add 8 to 10 million” it is not a surprise, it is not even a mystery. With the response “That is why the shares are down — and they should be!” from Laura Martin, managing director of equity research at Needham & Co, I merely have the thought that this lady does not comprehend user base needs and desires. In this for Snap to offer a +$5 option and not have any kind of pop up, ideas and advertisements, any of them disabled separately would have been a much better option. For the record, the app by Jack Underwood named ‘Today Calender Pro‘ at $5.99 took 8 minutes to contemplate. So as hatred of advertisement goes, I am surprised that the equity research firms are not more up to date as to the needs and desires of the users. In addition, we can argue all kinds of directions, yet when we consider the Wiki statement “the idea was to create a selfie app (application) which allowed users to share images that were explicitly short-lived and self-deleting“, in an age where trust of stored images is at an all-time low, there will be debates and there is more than one user with the thought ‘what if’. In addition, there is the consideration on the need (read: reasoning) to short term viewing and deletion of images to some degree. So as we see Snapchat as a possible opponent to Instagram, where would you put your money? Now that Instagram is linked to Facebook, we need to reconsider where we put our efforts as a user. We might want to go with: ‘there is an app need for everyone‘, yet when the novelty warez off (pun intended), we need to consider the users that go with ‘One size fits all‘, that is where the first issue of Snap now lies, as the people are reconsidering their place in photo sharing. Some people who go with short term deleted options are optionally not part of a social sharing media type. They will also need ‘their’ solution, there is no denying it, but overall that need will diminish faster soon enough. In addition there is the need for the user to be ‘entertained‘, which means other options, more options and diversity. In this Snap might be seen as too much of a niche.
Does that inhibit the drop in value?
Partially yes, but in this the response “surprised that Snap added only 7 million users during the second quarter” is actually a lot less surprising. As we now see places that are setting the stage for increasing ‘engagement’ (at https://thenextweb.com/contributors/2017/08/10/7-tips-increase-engagement-instagram/#.tnw_DmOvDLuY), we see the evolving side of Instagram, whilst Snap strays and is getting left behind. In this, 3 of those engagement ideas are actually right up the alley of Snapchat and as such the evolving need of Snap and their app needs to be reckoned with. In addition, the numbers in the LA Times article shows that there are other situations, in all the loss of expected gains, which is actually not the largest issue, it is the actual loss and that it is off by $76 million which is a much larger issue. So as I personally see it, the need to adhere to ‘new features for advertisers‘ dwarves to the need to ‘switch off advertisement features for users‘ If that opts the setting of $5 for a potential 150 million users getting to a ‘plus’ or ‘pro’ edition would be an awesome alternative, because every day that this is not considered implies that Snap Inc. Is giving the market to whoever is giving the users some Snapchat++ option. The market is there for the person stepping in and as far as the news goes, Snap is doing something, but not stepping in and as such is losing the market and whatever market share they had, in addition, the aggressive growth of Instagram does not help Snap that much either.
There is additional information in the LA Times, when we consider “Of the daily users Snap gained during the April-through-June period, 4 million came from North America, 2 million from Europe and the rest from elsewhere in the world. Snapchat had 148 million users this time last year“, It is when we start looking at Omnicore, is when we get some interesting results (at https://www.omnicoreagency.com/snapchat-statistics/), the two that caught my attention are ‘71% of Snapchat users are under 34 years old‘ and ‘Roughly 70% of Snapchat users are female‘ that is an impressive part, so when you toss away the advertisements, how can you cater to these two groups? The mere fact that you have 100 million users in either part is a lot more interesting; it is the market share worth enabling and growing upon. With ‘More than 25% of UK Smartphone users are on Snapchat, in Norway the number goes up to 50%‘ we see an even more interesting part. A part that could (if investigated properly), could see the need of the reference to the three engagement parts I hinted at earlier. So when you consider the options, is Snap even aware to the better part of their numbers of the needs of their users? That is seen even in more optional ways when you consider two of the fun facts given in this article, which was from January 2017. the first being ‘More than 400 million Snapchat stories are created per day‘ which means that there is a huge following and in equal measure more than one story a day per user is created. The second is ‘It would take you 10 years to view all the photos shared on Snapchat in the last hour‘, so there is a given one sided engagement, the question is can this be evolved to a much stronger engagement number that is two sided or more? The answer to that is basically a lot more appealing that the ‘optional’ requested growth of those 2 million users. It is the answer to making Snap the stellar grower Snap would like it to be. In all this the fact that close to 50% of the users is younger than 35 should be a clear path into engagement and facilitation. It is merely up to Snap to pick up the pieces and see where growth can be found, once they are there the ‘anticipation‘ of these analysts might get crushed in favour of Snap in more ways than one.
So where should Snap begin?
I always go with comprehension, know your user base and see what they need, no matter how that impacts other predictions or needs. If growth is the key need, than adhering to the users is the only way to exceed expectations of whoever seems to be wielding the stick of the analysts’ predictions. As I see it, they need to get there before Instagram and Snapchat++ give light to make Snapchat a mere memory, because there is no coming back from that, no matter how stellar the improvement becomes, for that places the User Level Expectations where it is not desired, with the other application that listened or offered the gimmick of the week.