Imagine if the torrent of tweets we have become inured to disappeared after 10 seconds. One can only wonder what the political climate of the United States might be like today…
Or, say you were a mega-diva like Madonna and you chose to launch your latest collection of songs with a video that was ephemeral… and didn’t last long enough for your fans to actually learn the tune or the words. How successful might you be against, say, another diva like Adele who decided to go a more traditional route and actually let her work last?
As with all conjecture, the first example will remain nothing but a guess and in some quarters wishful thinking. But the second? A true-life case study about Madonna’s only, ever, real release flop.
As we anticipate the Snap IPO and as I have just let loose my latest torrent of Snapchats from my Spectacles, it’s worth a moment or two to contemplate the journey from Picaboo; “Toss out those old, last-season photo messaging apps because now Picaboo let’s [sic] you and your girlfriends send photos for peeks and not keeps!” (Press release July 2011) to the IPO prospectus describing not an Internet or communications company but “Snap Inc. is a camera company.”.
Frankly, I’m in awe of these guys—Bobby Murphy and Evan Spiegel. They listen, they are all about People First and even with an IPO, they will not relinquish control. And, most impressively, they don’t follow the DIGIBABBLE trail…they change and pivot and evolve and, like Sam Walton, follow the real money.
To begin with, it was clear that disappearing pics of questionable taste and legality were not going to get them into the Facebook league. Not that there wasn’t a user base there, but as I wrote way back, serious advertisers would never take that risk. And despite their admonitions to the contrary:
Snapchat CEO Evan Spiegel and its other executives have previously said publicly several times that the photo-sharing app is against “creepy” targeted advertising: “We care about not being creepy. That’s something that’s really important to us…We think it’s weird when brands try to act like your pal by tracking you around the Internet,” Spiegel said.
It was clear to me that it was only a matter of time before they went all out…and go all out they did. Since day one of selling advertising back in October 2014, Snapchat offered advertisers metrics including views and reach, working with third-party measurement firm Millward Brown.
According to a number of advertisers, the metrics they offer, in terms of ROI, are superior to those of their competitors. Then, of course, there is access to data—the Holy Grail—another former evil they eschewed. According to Business Insider:
A new deal with Oracle Data Cloud (formerly Datalogix) will help match Snapchat users to offline purchasing behavior, allowing marketers to deliver more targeted ads and to better track sales conversions from Snapchat ads.
The deal means Snapchat has finally opened up to ad targeting using third-party data. It’s a first for the social giant, which until now shunned a practice that’s commonplace among its rivals. Google, Facebook, and Twitter have had similar partnerships with Datalogix for a while now, so the Oracle Data Cloud deal will help Snapchat compete against its peers in attracting greater interest from brand advertisers.
Marketers will now be run ads on Snapchat according to 100 different target audiences. These are based on consumer profiles like “cosmetics shopper” or “consumer tech shopper.” However, advertisers won’t be able to target users based on specific products they’ve bought, a Snap representative told Business Insider. This development follows up on the rollout of Snap Audience Match in September, which let marketers use their own lists of email addresses and mobile device IDs to target Snapchat users, and the debut of Snapchat’s ads application programming interface (API), which also coincided with a spate of partnerships with over a dozen ad measurement companies.
Wow…for guys who thought advertising was evil and data an intrusion.
Needless to say, once you open up the floodgates of data and advertising, you need a way to control access so that the maximum flow of dollars returns your way. Again from Business Insider:
Brands no longer need to go directly through Snapchat to buy their ads, thanks to a move that opens the floodgates to a larger volume of advertisers that perhaps have been reluctant to spend with the app due to its limitations.
Snap has been working toward this ever since it began offering self-serve advertising to more than 400 brands such as Nissan and Gatorade four months ago. Early results have been promising, and by firing up its ad technology platform and allowing third-party partners to plug into the app and deliver ads for brands and agencies, Snapchat will be hoping to get more involved thanks to less mystery around pricing and options – both of which have been notoriously muddy ground until now.
To help cope with the expected surge in demand, Snapchat has added five partners that will buy programmatically from its platform including Videology, Kinetic and Adglow, bringing the total up to fourteen. The benefits to Snap are obvious. However, handing over control to the advertiser presents a number of challenges, namely the degree to which Snap can maintain high quality video advertising on the platform and avoid a situation where users are flooded with low quality ads.
All this embracing of former evils “helped stoke investor appetite for Snap as the company geared up for the IPO.”
To be clear, I am not being critical, cynical or even sarcastic—to the contrary, I am pointing out that they will continue to evolve in ways that others haven’t, as their world view is based on their users and not some mega vision of world domination. And because, according to The New York Times, “investors who buy into Snap will have little say in the company’s strategic direction, however. Even after the I.P.O., Mr. Spiegel and a fellow co-founder, Robert Murphy, are expected to retain nearly 89 percent of the voting shares because the shares to be sold in the offering will hold no voting rights.”
Let’s put it all into context:
The company, Snap Inc., disclosed on Thursday that it expected to be valued at as much as $22.2 billion in the sale. At the midpoint of the offering’s range of $14 to $16 per share, Snap would be worth nearly $20.9 billion.
Even if the value were to drop, it would still be one of the biggest technology offerings of the decade. At this stage of the offering process, Twitter was valued at more than $12 billion, including options and restricted stock units, in October 2013. A year earlier, Facebook was valued at $86 billion at a similar stage.
I might also point out the both Google and Amazon are power players with Snap:
Snapchat relies on Google Cloud and Amazon Web Services to host the vast majority of the company’s computing, storage, bandwidth, and other services. The company has committed to spend $2 billion with Google Cloud and $1 billion with Amazon Web Services over the next 5 years.
You might want to buy some of their stock too…
There are those analysts who call Snapchat the new TV…foolish DIGIBABBLE and meaningless.
Evan Spiegel is clear:
“Somewhere along the way, when we were building social media products, we forgot the reason we like to communicate with our friends is because it’s fun.”
“The intent to preserve and capture something is very different from the urge to share, but they had become intertwined. Creating a representation of yourself for the Internet stopped making sense when we were all on phones and connected everywhere.”
“If we can always try and emphasize how important it is for both people to be [in a conversation] at the same time, that would be a win for us —that would be the holy grail. This captures the best parts of a conversation, that you and I are here, we’re both paying attention to each other, and that feels good.”
So while others are focused elsewhere, Snap will be watching how people communicate and share, and who knows where it will go?
Comparing Snapchat to TV is meaningless except for the way they integrate video advertising, which is more like old-fashioned TV, way more effective than always-skipped pre-roll. Which leads us all to the big question: Facebook or Twitter?
I leave that call to you dear reader. My crystal ball is cloudy, but my view is clear: Don’t count them out.
And remember, Twitter and Trump…and yes Madonna did flop on the “old” Snapchat but this is the company that didn’t sell out to Facebook and who left Facebook’s clones (Poke and Slingshot) in the dust.
So as you contemplate Snap Inc., I leave you with Evan Spiegel’s own words to ponder:
“In times of despair, you may believe the cynic who tells you that one person cannot make difference—and there are times it may be hard to see your own impact. I beg you to remember that it is not possible at this time or any time to know the end results of our efforts.”
Who knows where it will all lead? What we do know is that it’s been and will be continue to be one hell of a journey!
What do you think?