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Swiping Stories to make that ad money

by Jeanette SuhApril 4th, 2017

Too Long; Didn't Read

Seems unlikely after Snap’s Q1 call:

Companies Mentioned

featured image - Swiping Stories to make that ad money

Is there room for one more Story?

Seems unlikely after Snap’s Q1 call:

And though Spiegel laughs off concerns about Facebook smooshing Snapchat, going so far to call Facebook the new Yahoo(😱zing), it’s hard to ignore the possibility that we reached max Story capacity.

Both Facebook and Snapchat make money off of ads, so we must not forget that one of the core reasons why Stories became a hot medium for Facebook is because of revenue opportunity.

Facebook Corp has just shy of 2 billion users. Instagram alone has 700 million monthly/200 million daily users. So, Snapchat’s scale wasn’t the reason why Facebook went on a Story frenzy.

What was concerning was the time spent on Snapchat. Before Instagram Stories was a thing, people were spending up to 30 minutes in Snapchat per day, compared to 15 minutes in Instagram. And because time is mutually exclusive by nature, any minute spent in Snapchat was a loss for Facebook, in time and money spent.

Snapchat had a unique value proposition to advertisers in its young and aggressively growing user base. That value proposition narrows when compared to Instagram however, since Instagram remains relevant within the same user base. Once Instagram introduced Snap-like features, however, the demographic value proposition narrows.

Then as an advertiser, the differentiator comes from the ad products. Instagram married into Facebook’s more sophisticated and mature ads business, and because of this, it capitalizes on the established advertiser relationships and a stable business model as part of the deal. An advertiser has clear and measurable actions like shares, likes, impressions, views, etc, that perpetuates positive feedback loops for the brands’ accounts.

“Instagram is a follower platform where Snapchat is more of a best friend platform,” said Dan Grossman, vice president of platform partnerships at VaynerMedia. “Snapchat hasn’t encouraged brands to build up huge followings.” — Dan Grossman, Vayner Media, AdAge

Especially with Stories on Instagram, Instagram can also offer interstitials (basically) in its own Stories feed. It also kept the auto-advance feature, so the inventory remains higher than that of Snapchat. Once Instagram releases face filters, Instagram will also offer sponsored filters, thus leaving nothing unique (as of yet) for the advertisers on the Snapchat ads platform.

Can Snapchat still win dollars away from Facebook?

🤑 Possibly.

There are a couple things where Snapchat has a slight edge.

User growth

Compare user growth per region for each company:

Source: Business Insider

Source: Tech in Asia

Although not exactly an 🍎:🍎 comparison, Snapchat has a lot of opportunity to grow outside of the US, whereas Facebook needs to first bring the other 4–5 billion people on Earth online in order to add more users.

Filters and Stickers

Even before Instagram introduced Stories, many people downloaded videos and snaps from Snapchat and posted them on Instagram. Snapchat’s internal creative design agency cannot be mimicked as well as the other Snapchat features Instagram adopted. I still find the lenses on Snapchat much more, dare I say, delightful, than the face filters on Facebook (c/o MSQRD).

MSQRD’s face filters are done extremely well, maybe too well. Snapchat’s lenses are fun, silly, or frightening, so it invokes a lot of emotions in each of the lenses. MSQRD, on the other hand, is either very life-like or a uninspired.

Snapchat left, MSQRD right. Both jarring for different reasons

However, better lenses do not create a defensive moat for Snapchat.

What Facebook can do to become more competitive with filters is twofold: really crank up the bizarre/weird factor that MSQRD offers, like the Trump mask (ignoring any legal implications for now), and getting real cute. If creating content was a concern for Facebook, creating compelling filters will help not only increase content creation and time spent in the app, keeping those valuable eyeballs inside the Facebook family.

Snow filter, so kawaii

Instagram should consider stealing some talent from Snow, a Korean Snapchat with SO MANY CUTE FUN FILTERS. Users clearly are app agnostic when it comes to filters, as I have seen both Snapchat and Snow filters end up on Instagram posts. Users know Instagram has the reach, but because they can download their snaps, they don’t need to be loyal to any one platform and still cherry pick the best filters out there. This will prove to be a challenge for both Snapchat and Facebook as disappearing pictures and texts increasingly become a commodity.