The Perception of Investors Versus Users on Snapchat

It’s fair to say that Snapchat’s had a few rough months, but headlines don’t ever tell the full story. Today we’re delving into the status of the platform and the differing perceptions of investors versus users on Snapchat.

Recent Struggles

Several subpar quarters resulted in a major downsizing across the organisation. Back in August Snap laid off 20% of their entire workforce, restructured or discontinued initiatives, and just last week, announced plans to permanently close their San Francisco office. Then there’s the latest earnings, which saw the slowest ever quarterly growth since launch, dropping the stock value a crushing 25%.

How did Snapchat get to this place? The story is much bigger than a series of poor strategic choices, rather a reflection of an ever-changing and competitive social market.

A Shifting Marketplace

Snapchat’s faced an uphill battle the last couple years, with a slew of challenges hurled their way. Many of these well beyond their control.

One can trace the start of these issues back to the launch of iOS 14 in April 2020. The new data protection prompt shook up the entire industry, but no business was more impacted than mobile only platforms such as Snapchat. Data privacy laws made it significantly more difficult to track conversions across devices, driving a large lack of confidence in retail conversion reporting. This is naturally concerning for a platform which presents itself as an ecommerce haven.

Then there’s the pandemic. Covid dramatically impacted the supply chain of ecommerce goods, forcing some of Snap’s largest spenders to pull back from a lack of inventory.

The lasting effect of the pandemic remains the economic crisis we find ourselves in, impacting businesses of all sizes throughout the globe. Marketing budgets are often one of the first casualties of a recession, hurting Snap’s opportunities for growth through their biggest clients.

Finally, we can’t talk about social media without mentioning the single biggest disruptor in the space; TikTok. This social media sensation has taken the world by storm, significantly pulling attention away from the marketplace as a pivotal time. Why invest in the Snapchat when there’s a newer platform capturing the attention of the audience? Snap is also facing unprecedented competition not only from mainstays such as Meta, TikTok and Youtube, but plenty of new up-and-coming platforms such as BeReal and Weare8.

If that’s enough to make your head spin, just imagine how Snapchat’s execs are feeling. Certainly from this vantage point things aren’t going so great for Snap, or are they? Well, It all depends on who you ask. Indeed the future may be brighter than numbers tell.

Strong User Growth

Despite all of the economic woes, Snapchat continues to be a huge hit with its target audience. The platform has consistently delivered strong adoption numbers since its inception. Since 2019, the company has reported an increase of 17% through every single quarter. Downloads of the app up another 19% through the last quarter alone. These results demonstrate that despite the increased competition, the app continues to have favourability amongst the teen audience, who view it as a more authentic place to engage with their friends.

Snap has also made several big adjustments to maintain their hold on this audience, including the introduction of Snapchat+ this past summer. They just made the desktop version available for all users, which should in theory help with some of the tracking concerns. Snap also released smaller updates to highlight friend’s birthdays, created easier chat flows, and set story exploration controls.

Anecdotally, our own education focused campaigns on Snapchat continue to perform strongly for the pre-university audience. This provides further reasoning for the opportunities advertisers have to reach this much sought after audience in a place they find to be genuinely fun.

Investors Versus Users on Snapchat

The Differing Views of Investors Versus Users on Snapchat

Most platforms only dream of the kind of quarter over quarter growth we’ve just mentioned. So what’s the problem? Well as mentioned, it’s just not delivering the return that the bigwigs want. This conflict highlights one central point; When it comes to running a social media business, a return for investors is the only thing that matters.

It’s a real shame for their engaged users, who are really the ones who lose out on this conflict. If Snap cannot woo advertisers back and reverse its financial earnings, it’s likely to keep downsizing, hurting the quality of their core product.

The Future of Snap

So who are we to believe, the investors or the users? Advertisers are fickle, with budgets that react to the larger market, but it’s almost always bounces back. With a fanbase this engaged, and perhaps some small tweaks to their strategy, I’d wager Snap is here to stay.

What are your thoughts on the perception of investors versus users on snapchat?

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