Apparently investors were not too excited by Snapchat’s latest usage numbers.
Is it me or does the fact that the daily active number of users rose over 20 percent compared to last year outweigh the fact that the absolute number fell short of the expected figure by about 1 percent? Or maybe Snapchat is just different from other platforms?
Now would probably be a good time to state that Kantar Millward Brown has worked with parent company Snap Inc. since 2015, however, this post is my opinion and based on publicly available data. And I am intrigued by whether the investor disappointment is really justified.
Most commentators out there seem fixated by the relative growth rates of Snapchat and Instagram Stories, apparently ignoring the fact that Facebook has more than one horse in the stories race. WhatsApp Status now has 250 million daily users too. But here is thing: Stories is a feature, it is not the platform and it is certainly not the brand. If you have a huge existing user base, and WhatsApp has 1 billion of them, then getting some of them to use a feature is a lot easier than getting someone to download a completely new app.
Does this put pressure of Snapchat? Yes, because the network effect will take its toll unless Snap Inc. comes up with new features that appeal to its target audience. What it should not do is fixate on what the competition are doing but develop new features that play to its strengths. What Snapchat needs to do is continue to differentiate itself from other social media platforms not try to play them at the same game – providing investors let it.
Snapchat found success as the fun, mobile-first social media platform for a younger audience. Looking at BrandZ data for last year, Snapchat stands out as having a fun, playful character with a Rebel archetype, very similar to Unilever’s Axe. Both appeal to a younger audience. Both share the Rebel archetype (although Axe has had a much longer history of investment in that positioning). Both are rejected by a substantial proportion of potential users (which is just fine for their users who do not want to be seen using the same brand as their parents on a daily basis). Indeed, my colleague Martin Guerrieria recently wrote an interesting article which touches on Snapchat's character in this article about the proposed Google purchase.
If that is true then what are the implications for Snap Inc.? Focus full time on what will attract the next generation of young users. For many years that strategy worked well for Axe even though it pressures the brand to come up with something new every few years. So what do you think?
Written by Nigel Hollis,Executive Vice President and Chief Global Analyst at Kantar Millward Brown.