Target Audience
Snapchat (2016) states there are more than 150 million users on daily to see stories from friends and family. Thus, users can see events from worldwide. There are over 10 billion videos watched daily, an average user spends 25-30 minutes on Snapchat every day. This has been concluded by Snapchat that this app is about great storytelling; due to the mass number of millennials on Snapchat, big brands like Samsung, Starbucks, McDonald’s are paying to advertise on this platform (Solomon, 2015). There are three different types of advertisement that businesses can venture; Snap ads, sponsored geofilters, and sponsored lenses. Snapchat highlights successful stories by big brands with Snapchat advertisement; Gatorade, The Secret Life of Pets, Tinder, and Benefit Cosmetics.
Who are Snapchat? Why invest on this platform?
Advertisements
1. Snap Ads
A combination of unique branded video advertising and direct response; allows users to interact with the advertisement by ‘swiping up’ allows users to find more information of the advertisement. The ‘swipe up’ rate is 5 times higher than ‘click through’ rates (Snapchat, 2016).
Shaoolian (2017) found that Snapchat ads operate on cost-per-impression, indicating a minimum spend is $40,000 per month. The price increases for cost-per-swipe model and more features. Therefore, this form of advertisement is only suitable for large brands.
2. Lenses
Users can express themselves through different lenses that appear on their application, the lenses on brand advertisements are available for 24 hours only; Gatorade produce a lens to appear on the event of Superbowl that was viewed more than 165 million times (Snapchat, 2016).
According to Shaoolian (2017) if used for national campaigns, it is estimated to cost brands from $300 to $750,000 per day. Moreover, Michael Kors used this advertisement for the “National Sunglasses Day”; it was viewed over 104 million times and sales increased by 6%.
3. Geofilters
This allows the user to select brands’s Geofilter depending on their location, time and users can choose to specify why they took the snap. This aims to increase brand awareness and purchase intent (Snapchat, 2016).
Shaoolian (2017) explains this platform offers four different campaigns, including;
- Event – big campaigns i.e. ‘SuperBowl’.
- Shared spaces – for “high traffic” social space that marketers want to reach i.e. airport, college, university and cities.
- Chain – offline retailers.
- National – wide-scale brand recognition i.e. product or event.
Geogilters are used to appear in selected location and time period; pricing is fairly low, starting from $5 and it is based of the demand, location and the size of the geofence (Shaoolian, 2017). As demonstrated on the right, University of Brighton has made use of geofilter for the Moulsecoomb location in Brighton, UK.
Discover Tab
Snapchat has featured a news and advertising page like ESPN, Taste made, BAZAAR and National Geographic. This enables these channel companies partners to send special news updates. This was launched in January 2015 and found that more people watches specific coverage on Snapchat Discover than television (Snapchat, 2016).
However, Holloway (2015) contemplated against whether the ‘Discover’ tab is beneficial to old media channels, as the TV brands merged onto this platform; this page allows only 24 hours to view, meaning the content is quite limited and could be missed. The discover page yet proved to be effective, however TV partners are able to explore the possibilities with low stakes. The main critique by Holloway is if the content is available on Youtube and other platforms, why would users transfer over to Snapchat. Although, in counter in favour to Snapchat, a small-batch content could be good potential for users that are interested in an expanded experience.
Users were asked which discover stories do they usually view, the results are showed in figure 1 below. This findings further found half of the respondents only heard of the brands through Snapchat discover, including; Mashable, Vox, Tastemade and Fusion (Wallenstein, 2016).
Brands on Snapchat
Fashion brands have ventured onto Snapchat, by creating their own Snapchat accounts whom fans can follow. As Solomon (2015) found followers are keen to see behind the scenes footage; teasers can lure higher brand awareness and followers. Moreover, Adidas advertised their Snapchat account launch via Instagram using celebrity endorsement, Pharrell Williams (MTV, 2016). More fashions brands also have a Snapchat account including; ASOS, Balmain, Burberry, Calvin Klein and Puma (MTV, 2016). This may attract companies to use Snapchat platform but this specific platform relies on target audience engagement, if there are not sufficient audience this would defeat the aim of brand awareness (Shaoolian, 2017).
Go Behind The Scenes
According to Soloman (2015), Snapchat users are intrigued by sneak peeks into the operations of brands. As followers can feel exclusive to the information retrieved from the video or still image; this is seen as more powerful than a Tweet or Instagram photo.
“We have a lot of fun at work so we want people to see that. We shot an ad for Michael Jordan kid shoes last week but that edit won’t get released for eight months. On Snapchat it’s easy for people to watch and see how cool that is. They wonder how we’re filming and what it’ll look like in the end.” – Jessica Maslin, directing partnet at DayDreamCinema (2015, cited in Soloman, 2015).
Even employees are encouraged to use Snapchat to share photos, videos of food preparation, customer interactions, and secret handshakes (Solomon, 2015). This enables users to see and understand more about the brand.
Live stories has been said to be able to transform media, as it is like a new language, it is a new phenomenon in the making (Wallenstein, 2016). The behind the scenes of watching a live Republican presidential debate engaged more younger viewers, it showed viewers how the anchor, Anderson Cooper depicted the coverage.
Evolution of Snapchat
Snaplications?
“New and innovative ways to recruit crew people.” – Shaun Ruming (Whitten, 2017).
It was found 65% of Australian McDonald’s employees are under the age of 18 (Whitten, 2017). Therefore, McDonald’s is using Snapchat as a tool to hire new applicants in Australia. In order to apply, the applicant has to send a 10-second video of themselves with the McDonald’s uniform filter; this acts as the first round of the interview process. Post interview, McDonald’s will review each applicant and send a digital application to potential applicants (Peterson, 2017).
Risk and Reward in Investment
Now, we have highlighted the potentials with Snapchat and what mainly big brands can do on the platform, however we should consider the spectrum before leaping onto the app.
The success of Snapchat cannot be denied, as Hortwitz (2017) found Snapchat is filing an initial public offering of $3 billion in the spring, this offering will add value to the parent company raising it up to $25 billion, this is the largest IPO since Alibaba’s in September 2014. Hortwitz (2017) weighs the pros and cons of Snapchat;
Rewards
- Ad Revenue – 2016 Snapchat’s revenue was increased by almost sevenfolds to $404.5 million. Snapchat is planned to triple in size by 2020.
- User base and engagement – There are 158 million users on daily and increased by 48% in the 18-34 year old demographic. It was found each average user visit Snapchat 18 times per day.
- Capital resources – $987.4 million
According to Wallenstein (2016) a Snapchat survey was undertaken and found 48% of daily usage or multiple times usage was viewers using snap/stories on brands; another 47% uses Snapchat to view discover stories; finally, 44% view live stories on local and event content. Meaning, Snapchat are used for many reasons and brands on Snapchat are successful in their marketing tactics.
Risks
- Red ink and expenses – Net loss in 2016 of $514.6 million, which has increased since 2015 from $372.9 million. Moreover, Snapchat has a 5 year commitment with Google costing $2 billion.
- Attrition – Young user base is a risk as their minds are changing frequently.
- Regulation – Snapchat admitted on S-1 filing, there could be potential changes that could decrease the demand for the product and increase cost of doing business.
- Data Charges – if cost of data usages increase, user growth, retention and engagement could occur and be harmful to Snapchat.
- Architecture – Snapchat does not have a central HQ, meaning there could be potential problems overseen in empoyees and business functions.
Research survey conducted by Wallenstein (2016) found only 11% of users like live stories, 10% like new Discover stories every day, 9% likes discover stories, and 7% likes snap/stories from brands. This is a concern as users may not necessarily like the content shown by brands in comparison to their own stories, video chatting, and other features on Snapchat.
Further research found by Phua et al. (2017) found only 9.2% answered they use Snapchat to follow brands, in comparison to Instagram which holds 38%, Facebook – 30.5% and Twitter – 19.7%.
Takeaway
Snapchat shows there are increasing number of millennials on the platform, which is attractive to companies as a marketing tool. As shown, many big brands have ventured onto the app already and displayed different ways to use the app to market their new product, raise brand awareness and even employment. The app can be costly to advertise on, especially the national marketing, although it is expensive, it has seen to increase sales due to the app. There are more uses to Snapchat as shown traditional media has leaped onto the app in the discover page, with users only first hearing the brand through Snapchat. However, it was found users do not particularly like the advertisements by brands and less Snapchat users use this app to follow brands. Overall, Snapchat is resourceful to brands and companies but mainly only large brands can afford to market here; it is vital to weigh the pros and cons before deciding to advertise on Snapchat.
References
HOLLOWAY, D., 2015. Snapchat Gets in the ‘Not Social Media’ Game. Broadcasting & Cable, 145(6), pp. 24.
HORWITZ, C., 2017. Snap or Pass? Variety, 335(1), pp. 23.
MTV (2016) 15 fashion brands you need to follow on snapchat immediately [Online] < http://www.mtv.co.uk/mtv-style-0/news/15-fashion-brands-you-need-to-follow-on-snapchat-immediately > [accessed 3rd May 2017]
Peterson, H. (2017) Mcdonald’s is now accepting Snapchats as job applications [Online] < http://uk.businessinsider.com/mcdonalds-is-now-accepting-snapchats-as-job-applications-2017-4 > [accessed 3rd May 2017]
Phua, J., Jin, S.V. & Kim, J.(. 2017, “Gratifications of using Facebook, Twitter, Instagram, or Snapchat to follow brands: The moderating effect of social comparison, trust, tie strength, and network homophily on brand identification, brand engagement, brand commitment, and membership intention”, Telematics and Informatics, vol. 34, no. 1, pp. 412-424.
Shaoolian, G. (2017) Is Snapchat The Right Social Media Marketing Platform For Your Brand? [Onlilne] < https://www.forbes.com/sites/gabrielshaoolian/2017/03/08/is-snapchat-marketing-the-right-social-media-platform-for-your-brand/2/#19c768f66627 > [accessed 3rd May 2017]
Snapchat (2016) Adverts [Online] < https://www.snapchat.com/l/en-gb/ads > [accessed 3rd May 2017]
Snapchat (2016) Intro to Snapchat [Video] Youtube. https://www.youtube.com/watch?v=Hiv4KeoBeuo [accessed 3rd May 2017]
Solomon, B. (2015) How To Use Snapchat: A Small Business Guide [Online] < https://www.forbes.com/sites/smallbusinessworkshop/2015/08/25/how-to-use-snapchat-a-small-business-guide/#446bd9e10187 > [accessed 3rd May 2017]
WALLENSTEIN, A., 2016. Snap Judgment. Variety, 331(8), pp. 34-39.
Whitten, S. (2017) Snapchat just made applying for a job at McDonald’s easier for millennials [Online] < http://www.cnbc.com/2017/04/07/snapchat-just-made-applying-for-a-job-at-mcdonalds-easier-for-millennials.html > [accessed 3rd May 2017]