A Rocky Start to 2018
Back in February, Snapchat was the focus of every millennial and gen z conversation, but all for the wrong reasons. In November 2017, Snapchat announced that in an attempt to combat and clear their app of fake news, they would release a new update that separated the “social from the media.” Essentially, this meant that a friend’s content will appear on one screen, while subscription pages, celebrity, and advertiser’s content appear on a different one. This seemed like a user-friendly idea that Snapchat users would enjoy.
Unfortunately, as the update began to roll out in January and February of 2018, users were furious. People who had been using the app since its release in 2011, deleted the app without thinking twice. Facebook,Twitter and Instagram – Snapchat’s social media competitors – were flooded with outraged teens and young adults voicing their frustrations. They questioned if Snapchat would listen to their users and revert back to the old, beloved platform. “I wonder if @Snapchat are reading all these negative tweets and actually plan to do something about their shockingly bad update. I won’t be using it until it goes back to how it was #snapchat” The determination to get the old app back was so strong, over one million people signed a petition on change.org to reinstate the old app design.
A few days later, Snapchat users were once again disappointed when Snapchat CEO, Evan Spiegel, confirmed that Snapchat would not be changing the app back. At an event soon after the backlash began, Spiegel said, “We are excited about what we are seeing so far… Some of the complaints we are seeing are reinforcing our philosophy…” With confirmation that the app was not changing back, fans had no choice but to either adjust to or abandon the new app. Between Q1 and Q2, 3 million users chose the later, as Snapchat saw a massive decline in daily active users.
To many people, this seemed like a problem only for millennials and in this same assumption, the generation would either get over it or find a new app to use. However, this update caused many more problems than outraged young adults and now six months later, advertisers and Snapchat are seeing the negative effects of not understanding their audience.
Drastic Ad Revenue Decrease
On September 25, eMarketer drastically lowered its ad revenue projections for Snapchat in 2018. Last March the projections were released at 1.03 billion, which a few days ago, was lowered to $662.1 million. With this adjustment, Snapchat owns less than 1% of the digital ad market. For perspective, direct social media competitor, Facebook, owns 20.6%. Part of this decline in revenue stems from their new programmatic ad platform. In June, they released a self-service ad buying platform that brought in more advertisers but also, due to the automated effectiveness of programmatic, lowered the overall ad prices. However, that the new ad platform doesn’t hold sole responsibility for ad prices dropping. Many advertisers are seeing a drop in ROI because the size of Snapchat’s audience is decreasing. Advertisers won’t use Snapchat if they can’t ensure views and conversion – they will spend their digital dollars on other platforms. So, the question is, after the app’s rocky year, how will Snapchat face 2019? Will they implement change in hopes of remaining relevant or will they fall to the wayside like other once-loved platforms like MySpace and Vine?
A Peek Into Snapchat’s Future
If the last few weeks are any indication of where the app is headed, I predict Snapchat is going up. Earlier in the week, they announced a partnership with Amazon. Users can use the Snapchat camera to scan a product or barcode that then prompts an 
Amazon card with either that product or similar products they offer. Clicking on the card takes consumers to the Amazon App where they can make a purchase or continue browsing. They are slowly rolling this feature out to users and I foresee this update will receive much more positive acceptance than that of the update earlier in the year. From an advertising perspective, as Snapchat is hoping to gain back some of its lost revenue and market share, partnering with Amazon, a company very committed to increasing and refining its advertising, this is the perfect move (read more about Amazon’s advertising changes here).
In the last few months of 2018, we will have to wait to see if Snapchat is able to gain back some of its lost advertising momentum. Incorporating user friendly features, such as the Amazon partnership, puts focus back on the user – something that Snapchat didn’t consider earlier in the year. Hopefully they continue with this focus on their user experience and remain one of the players in the digital advertising game.
With an overwhelming amount of new players and shifting paradigms in digital advertising, having a strong digital partner to manage your brand’s digital ad buying is crucial and Digilant is ready to step in to help. Reach out to us here to learn more about our digital media buying solutions and services..
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