Despite only being a player in the world of paid advertising for two years now, Snapchat has already made huge waves in the industry. Innovative new features such as lenses and geofilters have redefined the way consumers engage with branded content and offered advertisers more creative avenues to reach their audience. In one of the most successful examples, Taco Bell’s infamous Cinco de Mayo lens generated 224 million impressions in just 24 hours. Marketers have recognized the massive potential of the platform and are clamoring to get a piece of the pie, prompting the social media app’s first foray into programmatic inventory. This shift, along with the re-branding of the company as “Snap, Inc.”, reportedly prefaces an upcoming IPO that would value the company at approximately $25 billion. This would make them a publicly traded business like Google or Facebook, and truly announce to the world that they have arrived as a major force in the social space. However, with new stockholders to answer to, what kind of changes can be expected for the future?
As it turns out, maybe not the ones you would expect. On October 10th, Snapchat released an update that pushed Discover, their flagship inventory, to the bottom of the Stories page after a long reign at the top, drastically reducing visibility for their publishing partners, including names such as ESPN, Cosmopolitan, and BuzzFeed. This change represents a move back toward user friendliness after many of Snapchat’s most recent updates focused on benefits for advertisers.
Jill Sherman, head of social at DigitasLBi told AdAge, “I think publishers will feel jilted at first, but eventually they’ll realize that people spending more time in the Snapchat app is key to their success, too".
With Discover accounting for 43% of ad sales, any reduction in demand would represent a modest drop in revenue. These losses are presumably intended to be offset by sales of Spectacles, the recently announced wearable tech from Snap, Inc. The glasses have a 115° camera installed on either side, with a button that records ten second video snippets and can immediately upload them to your phone. Keeping the failures of Google Glass in mind, the Spectacles will sell for $130 and function more like a “toy” according to CEO Evan Spiegel. The hardware is a major step toward diversification for the company and should serve to keep investors complacent in the face of any changes to advertising.
Typically an IPO is seen as good for advertisers and bad for consumers. The idea is that the profits-driven board puts blinders on and loses sight of the experience that attracted users in the first place. For one example, seeing more ads and branded content than actual posts on Facebook has become a common complaint. But Snap, Inc. is demonstrating that they know how to walk this tightrope and put out a product that fulfills the needs of both parties. They can make their app more enjoyable for the consumer by focusing on relevant content while also introducing more sophisticated targeting capabilities on the back end. There may be some growing pains, but ultimately what this comes down to is that an innovative new platform is continuing to develop, and that can only mean good things for the industry moving forward.