At the 4th Annual Online Marketing Agencies Meeting hosted by Aula CM in Madrid’s Círculo de Bellas Artes, the first panel was about social media platforms, the good and the bad, and ultimately, best practices. One of the panelists declared “Snapchat is dead.” But, should we be so quick to deem this statement true? And, what is Snapchat anyway?

Snapchat is an application that allows users to post and send temporary photographs (showing up from 3 to 10 seconds on a screen) or videos that disappear after 24 hours. Users can also send text messages to friends about certain photographs or videos. Snapchat is also known for pioneering many features: Stories, which allows users to upload content onto their profile for 24 hours, geo filters for public places, and image filters that let users enhance or transform their selfies with other features. Snapchat is also a public company, listed on the New York Stock Exchange since March 1st, 2017, making it the biggest technology IPO since Facebook’s in 2012.

Why investing in Snapchat stock may not have been the smartest move

After its first quarter as a public company, Snapchat saw a loss of $2.2 billion. When we look at the financials, some figures do not bode well: “Snap’s high valuation, lack of profitability and slowing user growth have made it a controversial stock on Wall Street since its IPO…” The same Forbes article cited Thomson Reuters figures that Snap’s stock is valued 44 times the expected sales in the next 12-month period. Facebook’s figure is 14 times while Google parent Alphabet’s is seven times.

But what else besides the performance of its stock could be leading people toward the exits? Some factors have led to a dire prognosis for Snapchat. First off is bJeremy Goldman quoted SocialFresh’s Jason Keath in an Inc. magazine article that: “Snapchat was on the rise in 2016 because they had no competitors who were able to capture their magic[.]” And that’s because Facebook has been coming along and copied many of Snapchat’s pioneering features.

First, Instagram started with adding a Stories feature just like Snapchat, then added geo filters, and in its latest move, has added face filters to its roster of Snapchat-copying. While Instagram VP of Product Kevin Weil stated that this copying reflects how the tech industry works because a format pioneered on one platform will spread widely across multiple platforms, Snapchat then loses many of the features that gave it a competitive advantage. And Facebook has also recently introduced several features to copy Snapchat: Stories to both their regular newsfeeds and to Messenger, camera effects that are similar to Snapchat filters, and allowing direct messaging to Facebook users.

It also may not help that excerpts from a deposition have highlighted that founder Evan Spiegel supposedly scoffed international expansion to India and Spain because he considered them to be “poor countries” and also once stated that Snapchat was an app for “rich people.” This may not be the right mindset if you want an app to take on the world. And naturally, this did not help Snapchat’s share price.

Why Snapchat is still alive and kicking

While it is easy to scoff poor financial figures and the fact that Instagram and Facebook are copying many of Snapchat’s features, we cannot discount the one thing that competitors have failed to copy: its loyal fan base. 35% of Snapchat’s 60 million users don’t use Facebook on the same day they are also using Snapchat. Plus, 46% of Snapchat users don’t have accounts on Instagram. Not only that, Snapchat has a demographic benefit that Alan Wolk calls its secret weapon: “it is home base for Generation Z, the 12–to–22–year olds who populate the nation’s middle schools, high schools and colleges.”

Just how important is Snapchat to Generation Z? These statistics might put it into perspective. A recent article from The Drum highlighted results from an online study of high school and college students that calmed 89% of subjects valued Snapchat for staying touch with friends. In the same demographic, more of them cited the daily use of Snapchat (78%) than Instagram (76%) or Facebook (66%). On average, users check Snapchat at least six times a day, and according to SCG’s Michael Cherenson, “[a]lmost 25 percent indicated Snapchat is essential to their relationships.”

It may be that Snapchat may have to be seen as more of a niche brand because of its diminished ability to compete with Facebook and Google, says Keath. Two developments are coming out of Snapchat that could lead to it being more niche. Snapchat’s Snapchat Discover feature is a window of opportunity for media outlets like BuzzFeed and Cosmopolitan (who joined Discover when it was first launched two years ago, as well as for advertisers. They are planning to prioritize content specially made for the platform over other types of media content. Regarding advertising, Snapchat Discover lets publishers sell space in different channels before splitting revenue, which minimizes the risk more often associated with traditional ad spends. Snapchat is also pushing into television, with Snap TV, which will host original, short-form shows from well-known providers such as VICE, ESPN, the NFL, ABC, and A&E. The episodes will be from three-to-five minutes long and are meant to serve as a compliment to traditional television. The episodes will be accessible using the Stories feed.

What’s the verdict?

In Module 2, we’ll break down the different social media platforms, their uses, as well as their advertising capabilities. It’s fundamental that your digital marketing strategy is best optimized to the channels you’re going to use because the same actions or tools won’t work the same on each network. And, you’ll be able to decide for yourself, and for your brand, whether Snapchat is worth it or not.

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