In honour of Halloween, gather around the
campfire with us for a true marketing horror story. A tale of plummeting
stocks, vanishing users, and damning incantations by market analysts and Kylie
Jenner. This is the story of SNAP Inc. Read on…if you dare.
It was a dark and stormy night…
On October 1st,
the Dow slammed its doors on stocks for SNAP Inc, hitting an all-time low of
$8.23 per share. Stocks for the company had been in a free-fall since February,
just a year after the American technology company had gone public with it’s
“in-the-moment” photo sharing platform. Since the previous July, SNAP had lost
11 key staffers – and now former Vurb CEO Bobby Lo, whom SNAP had acquired just
two years ago with a $114.5 million four-year vesting retention deal, was politely pulling out of the company’s day-to-day operations and into a
vaguely defined “advisory role”.
The Blair Rich Project
SNAP’s talent
retention issues had become an obvious problem to investors. On September 5,
BTIG analyst Rich Greenfield cast a heavy stone on SNAP’s business acumen.
“We are tired of Snapchat’s excuses for missing numbers and are no
longer willing to give management ‘time’ to figure out monetization,”
Greenfield said.
A week later, a damning report by Business Insider stated that Snapchat’s user base had begun declining worldwide, with 300
million daily users falling off the wagon. This could only mean advertisers
were sure to follow. This was in direct contrast to SNAP’s reported ad revenue forecasted for 2019, which showed a $1.25 billion dollar increase. Plummeting ad prices appeared to
have coaxed in hesitant marketers, like a group of foolish teenagers heading
off into the foggy woods.
“We have been disappointed in SNAP’s
product evolution (as have users) and see no reason to believe this will change,”
said Greenfield, cursing the company with a “Sell” rating and a new forecast of
$5 per share.
Kylie’s Kiss of Death
This grim prognosis,
coupled with echoes of cosmetics/social media mogul and Kardashian family
member Kylie Jenner’s tweet which threatened the relevance of the platform, did
not help SNAP’s image.
Jenner’s tweet has
previously been attributed to a $1.3 billion dollar drop in SNAP’s market value
back in February, just after 2018 values peaked at $20 per share. The validity
of the correlation between Jenner’s tweet and SNAP’s decline was controversial,
but as it often goes – on the internet, what people think is more powerful than
the facts.
Who will survive?
From a marketing
strategy perspective, our sixth sense tells us that allocating a significant digital
marketing budget into Snapchat, SNAP’s core product, will be a grind house
B-movie at best and a full-on zombie apocalypse at worst. From a user
perspective, not only have users declined and ad congestion increased, users
(mainly female Gen Z'ers in the 18-24 age group) have the option to skip ads
with no minimum runtime.
Instead, social media
strategies for most businesses should stick to safe-haven platforms like
Instagram, whose user growth and engagement rates continue to climb steadily. Facebook and
YouTube continue to slay the competition in advertising potential – with
Facebook’s robust targeting tools and reasonable ad service costs, and
YouTube’s incredible organic SEO power.
Furthermore, brands
should not discount the value of a solid SEO and inbound marketing strategy,
coupled with consistent, high-quality content. Focus on using social media
during moments of consideration; when browsing, chances are your audience is
consuming inspiration without explicit intent to buy. The highest conversion
potential is still on Google, so if you’re investing in Snapchat’s
interruption-style ad service but haven’t yet padded your website with SEO-friendly
content, you may have your priorities backwards.
Don’t get lost in the woods
A mistake some brands
make is pouring money into a social media strategy based on whether they think
they should be there, rather than taking the time to study their audience’s
social media habits and setting realistic KPIs based on the potential value of
the platform’s usership. The truth is, very few brands fill their treat bags
based on social media attribution. Most social media campaigns sit at the top
of the sales funnel, at the awareness stage, or nurture relationships with
existing customers at the funnel’s end.
Where Snapchat fails
to make the cut for brands is with its focus on messaging, where ads are
literally forced into the picture as people are trying to communicate with
close friends.
So, what about Instagram
stories?
Data from this June shows twice as many users engage with Instagram’s Stories feature, and Instagram’s IGTV feature provides an enhanced version for longer-form
in-the-moment content. Instagram also has the benefit of offering limited-time
content served to relevant audiences with the creative potential of a core
account featuring evergreen videos and stills.
When
will the nightmare end?
Compared to Snapchat’s
geofilters – the choice is obvious. Go with the hero platform that’s going to survive until the end of the show, and rest in
peace.
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Thanks for reading!
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