Timing is everything.
Unfortunately for Snap, its window of opportunity may have already disappeared, much like one of its app’s messages.
But first, let’s get to the good part. Snap is releasing a major update and overhaul for Snapchat. It will roll out globally over the next couple of weeks. And Snap got a lot right in this update.
We at Applico have written several times about Snap’s mistakes with its platform over the past year, most notably killing its Auto Advance feature and refusing to introduce an algorithmic feed. Finally, this update corrects these mistakes.
How so? First, Snapchat is introducing a more thoughtful implementation of its Auto Advance feature, which allows you to quickly preview the next Story before it throws you into viewing it. You can easily swipe to skip to the next Story if you’re not interested.
Second, Snapchat will now sort your content algorithmically, on the basis of past engagement, rather than in reverse chronological order, which always places the most recent content at the top.
These two changes will help increase user engagement, which dropped off noticeably after Snapchat rolled back its Auto Advance feature last year. They also will help Snap increase its monetization by playing more ads between Stories. Without Auto Advance, ads would only play at the end of a Story, meaning almost no one watched them.
While many users will still skip through ads, the passive content consumption experience that Auto Advance promotes will certainly increase ad engagement.
Finally, Snapchat’s update resolves its longstanding identity crisis. Snapchat has two platforms in one app — its core messaging platform, which was how Snapchat started, and a content platform in Stories.
Snapchat has struggled with how to combine these two very different interaction models. Its messaging platform is a direct, one-to-one interaction with mutual communication. The content platform is a one-to-many model with asymmetric communication — one person creates content and many others watch it.
With the update, Snap has split these two interaction models in a smart way. Now, all of your friends on Snapchat (people you follow who also follow you, double-opt-in model), including their Stories, will appear in one tab to the left of the camera. And the Stories of people you follow who don’t follow you (single-opt-in model) will now appear in the revamped Discover tab that lives to the right of the camera.
Every interaction that fits the double-opt-in messaging platform now lives to the left, and the content platform is all on the right.
Better yet, Snap is combining Stories and Discover to create one experience around “creator” content. This includes professional creators such as Vice as well as celebrities and others you follow on Snapchat. This new feed will showcase content with large thumbnail previews, much the way the Discover tab does now, and it will sort content algorithmically according to past engagement.
This tab will start to look a lot more like a mobile-first YouTube and less like a secondary interaction pasted on top of a messaging platform, as Stories has in the past.
Additionally, the new Discover tab will feature new and trending content from other creators on the platform. Previously, discovering new content was nearly impossible, outside of word-of-mouth referrals.
This difficult experience was intentional, as Snapchat didn’t want to compromise the intimacy or “coolness” of its messaging experience by making it too accessible. Now that Stories and Discover are unencumbered by Snapchat’s messaging platform, for the first time Snapchat will actively try to help you find engaging new content.
All of these changes look like a very big leap in the right direction for Snap. The issue is that it likely comes too late to change Snap’s fate.
Snap’s user growth has slowed to a standstill over the past year, and Instagram’s Stories copycat has taken off like a rocket. It surpassed 300 million daily active users in November, nearly double Snap’s daily user total.
This update is not likely to slow Instagram’s growth or win back many of these users.
What it is likely to do is help increase engagement with Snap’s existing users. And, more important for the company’s prospects, the update should significantly help increase revenue. Snap’s revenue has fallen well short of expectations for this year, and far short of the company’s stated goal for the year of $1 billion.
But here’s the problem. For investors, Snap’s increased revenue likely won’t move the needle. Snap’s IPO story was all about user growth. Now that user growth has stalled, a pivot to increase its revenue per user isn’t going to change investor expectations.
In fact, it will only reinforce investors’ beliefs that Snap is just the next Twitter, as we’ve suggested before.
Like Snap, Twitter waited far too long to make changes to its core platform to help it scale. It arguably still hasn’t done enough to attract and retain new users. But what Twitter did accomplish is a significant increase in its revenue and its revenue per user over its first couple of years as a public company.
However, Twitter had sold itself as a user growth story, not a revenue growth story. Its attempt to pivot this story was not well received by investors. Snap looks to be following this same trajectory.
Twitter hasn’t yet managed to turn a profit, but Snap still has a chance if it can prove to advertisers that its mobile-first ad products bring much higher engagement than typical ads.
Snapchat’s chance to become a true challenger to Facebook is likely gone. But it could well build a viable business.
Originally appeared on Inc.
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