Person taking a picture with a phone
Snapchat is attracting global celebrities as power users and the world’s most prestigious brands as advertising partners. PHOTO: Henry Marsh

Following its launch in late 2011, Snapchat was little more than an ephemeral messaging service for reckless teenagers.

But as 2017 takes shape, Snapchat is attracting global celebrities as power-users and the world’s most prestigious brands as advertising partners.

Not to mention, Snap Inc. — the company behind Snapchat — recently filed for a $3 billion IPO, which will float the company on the New York Stock Exchange. That’s a significant step for an app under six years old, especially when you consider it took Twitter and Facebook seven and eight years, respectively, to make the same leap.

With that in mind, it’s fair to say that Snapchat is all grown up. But what exactly has prompted big names and brands to start investing their time and money into Snapchat?

Snapchat has 158 million users — which isn’t many at all.

In contrast, Facebook has 1.8 billion users, while Facebook-owned Instagram, the social network most comparable to Snapchat, boasts 600 million. By the numbers alone, it’s hard for a company to justify spending much time on Snapchat’s relatively small user base.

But Snapchat is proving that size doesn’t always matter.

Snapchat: Home of the Millennial

Snap claims that their app reaches 41 percent of 18 to 34 year olds on a daily basis — making Snapchat a wide window into the Millennial world. A window that Mashable, Buzzfeed, The Economist, Vice, National Geographic, Sky News and many others are leveraging.

Moreover, Snapchat’s unique interface empowers brands to connect with that Millennial audience in ways that Facebook and Instagram don’t support.

For instance, on top of geo-targeted Snapchat filters and lenses, users can tap and swipe their way through whatever sponsored stories takes their fancy, with algorithms independently setting the pace.

The Ellen Show uses Snapchat in the lead up to new shows.
The Ellen Show uses Snapchat in the lead up to new shows.PHOTO: Snapchat

Snapchat has also started to dabble in disruptive ads. In recent months, users have been subjected to short commercials that play automatically at the end of Snapchat Story. It’s the kind of marketing that’s annoying, but effective.

Even more recently, Snap brokered a deal with the BBC to bring Planet Earth II to Snapchat. A move that suggests Snap may attempt to blur the line between Snapchat and Netflix.

But sponsored Snapchat content isn’t the only way enterprises are connecting with their Millennial audiences.

The NFL is a prime example of an organization using the freely available features of Snapchat to reach the younger population. They used the platform to provide video highlights, commentary and news from the 2017 Super Bowl as it unfolded.

The NFL posted on Snapchat throughout the 2017 Super Bowl.
The NFL posted on Snapchat throughout the 2017 Super Bowl.PHOTO: Snapchat
Snapchat also excels at harnessing the attention of its users.

If we take engagement as the KPI, Instagram content fetches a 27 percent  engagement rate, while Snapchat’s engagement rate is 61 percent . Although both of these figures would drop in the case of sponsored content, Snapchat’s high engagement rate is another indicator that its inviting interface is getting more value from a smaller set of users. 

Ushering in a Camera-First World

A targeted community of Millennials isn’t all that Snapchat offers to enterprise brands.

On the contrary, Snap wants to be more than just an app vendor. It wants to be a movement that helps usher in the camera-first world that every major brand is already preparing for.

Snap alluded to this via its S1 form when they wrote the following:

“Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way that people live and communicate.”

With the emergence of Facebook Live, Twitter’s purchase of Periscope, and Instagram’s unveiling of Stories (an idea brazenly stolen from Snapchat) it’s clear that the camera is becoming increasing important to the consumer.

Plus, with technology like VR on the horizon, the evolving camera-first world is ripe for innovation. 

Unlike its rivals, Snapchat has always been a camera-first app. It has consistently launched directly into camera mode since its launch, allowing user to capture moments faster than any other major social networking app.

Snap’s innovative roll-out of Spectacles is also indicative of the company’s fixation on reinventing the way cameras are used.

Fully Grown, But Not Yet Mature

Despite Snapchat’s gradual but impressive pivot into the realm of enterprise marketing, big problems lurk beneath the surface.

In lieu of its IPO, Snap published figures revealing that its advertising partners had poured $404.4 million into Snapchat in 2016 — and yet they still reported losses as high as $514.6 million.

More worryingly still, is that this problem is an old one. In 2015, Snapchat attracted $58 million in ad revenue, but still managed to lose $372.9 million.

And this time, the figures from rival social networks aren’t so comforting.

Facebook reached profitability well before its IPO in 2012, with ad revenues still growing significantly year-on-year. Twitter on the other hand, like Snapchat, couldn’t turn a profit before it hit the stock market in 2013 — and it still hasn’t.

So, despite being all grown up, it seems Snap has a lot of maturing to do, and fast.