I have yet to speak with anyone who thinks Snapchat's valuation is realistic and that their business model will sustain them. When I see this I just think of Twitter all over again.
I would love to hear arguments supporting Snapchat though.
I would love to hear arguments supporting Snapchat though.
Snapchat's Ads are effective. More effective than anything else on the internet or other apps. They are authentic, entertaining, in-context and brief. They follow the 3Vs: Vertical (Made for Mobiles) / Video (Great Way to Tell Story) / Viewing (Always Full Screen).
Snapchat's average monthly use per visitor is way above other social networks for the younger generation. And it is growing incredibly fast.
Advertisers are able to integrate deeply into the app in various unique and interesting ways.
Snap chat is the leader a new wave of advertising, in the way Facebook did a few years ago, and google before that.
For B2B, Facebook is more or less dying. Twitter has too much noise. I'm still trying to figure out how Snapchat fits in here but people are promoting it aggressively at least
Snapchat is the proverbial 'new MTV' that marketers have been waiting to see appear on the internet for perhaps 20 years. Huge numbers of young people use it daily. Engagement is great, perhaps unlike any other consumer internet product: you watch it the way you watch tv. Just queue up a bunch of stories and stare at it for a while. Advertisers and the brands they represent like this. A lot.
The newly renamed Snap Inc has even greater ambitions. They aim to be the 'new Apple.' A consumer electronics line that achieves more than customer loyalty, something more like emotional commitment. The sort of 'brand identity' that gets written about in textbooks but rarely actually exists in the world. A company that produces functional gadgets that are meant to be flaunted like jewelry.
Is Evan Spiegel the 'new Steve Jobs'? Personally, I doubt it. But there are plenty of wealthy and connected people who seem very invested in that notion becoming reality.
That being said, I think Snapchat's current valuation is wildly overblown and that they are trying to cash out on an IPO before advertisers realize that the ROI isn't there. Snapchat already has some of the highest CPMs in the market, and their sponsored content is incredibly expensive. I think advertisers wanted to experiment with the platform, but I think the jury's still out if it's worth it. Regardless, if Snapchat can lock in a few high priced deals they can gain some momentum into an IPO, but once they go public, there's going to be much more scrutiny in their metrics. I suspect blowing hundreds of thousands of dollars to woo the fickle, ad-adverse millennial with a filter will ultimately prove ineffective.
(And you can also try and leverage it to get VCs to pay your bills.)
However, I never look at the ads and instead stick to my friend's user generated content. Once ads are forced on users, they will jump ship.
Twitter was never about fast communication between two people, no one every said "Let's see if Mike wants to join us for dinner, I'll just Twitter DM him". Whereas WeChat, Viber, Whatsapp allows you to communicate quickly, there's no connection to advertisers (from what I know). Therefore snapchat is valued so highly because it does what twitter and Whatsapp et al couldn't do.
Bebo failed at that.
I wouldn't. Face it, this class of SV "startups" are the new pump-and-dump investment vehicles. They burned $3B in funding to build a chat app, and Prince Bin Talal needs to cash out with 10X return at some point.