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Comment by ditonal | Hacker News Reader

After initial skepticism, I like Snapchat for reasons in the article (lower pressure). And I think they "get" the younger generation and have good product strategy, a lot like Facebook succeeded in a crowded space for similar reasons with a similar amount of skeptics.

Problem to me is they seem more like Twitter than Facebook in that their only real monetization path is ads, but their ads don't seem that valuable.

If I'm selling watches, I want to pay Google to advertise to people who just searched for watches. If I'm selling retirement planning, I want to pay Facebook to advertise to middle aged people who like personal finance topics. But who wants to buy Snapchat ads? Some people who want to do brand awareness marketing on a trendy platform but not much else. So I think just because they can get lots of users does not guarantee success.

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In Snapchat, people actually routinely engage with ads by spending time setting up and taking photos using branded filters, then sharing that ad with friends. That's starkly different from the typical loons you see replying to an ad on Twitter.

But the [multi billion dollar] question is do they then buy the stuff from the sponsoring companies? Most advertising on Snapchat is experimental, we'll have to stick around to see if the experiments are successful.

It might be more useful for brand awareness. Car companies don't advertise their products expecting to get a sale - they're doing it to strengthen their brand with consumers in general (more often than not for the people that already bought their product).

I don't use Snapchat nor am I a marketing whiz, so I could be wrong.

Isn't that the point in brand awareness, to sell product?

At some point, of course, yes. The rubber must meet the road.

The problem is that most marketers/advertisers can't meaningfully quantify the value of their brand spend. There's a joke in the advertising space: half of my marketing spend is useful and half isn't. I just don't know which half.

Understood, and this is why you tend to see more established spending spending money on campaigns that achieve brand awareness rather than campaigns that translate into immediate conversion right?

Doesn't matter, it helps brand image/awareness, which indirectly affects sales. They're already very successful.

If they want to justify $25 billion plus valuation they will need to open the platform to be useful to businesses other than the high spending brand advertisers, which is certainly a lucrative segment but not the totality of advertisers. Once the people at Snapchat just accept that buying things is also apart of the human experience, then they'll be able to build in direct response ad formats and sales tracking (online and offline). Right now their ad formats are on the level of vanity, though vanity does sell it doesn't sell to all. In the long run, for Snapchat to justify $25bn and greater the local Chinese restaurant needs to be able to send an ad with a call to action to Snapchat users in a vicinity of their choosing, and also be able to track conversion by who walked in. This is all technically feasible, and Snapchat may open up to more sales conversion advertisers. But, that same Chinese restaurant could be doing this advertising campaign today on Facebook and Google. So what makes Snapchat special? They will need to train their users to accept advertisements from unknown entities, because right now their ad content leverages previous brand recognition and borders more on entertainment than sales.

They're losing buckets of money and Twitter should be a great example of having trouble selling ads to social media users. Snapchat is the hot new thing so they're getting ad dollars in experiments from major brands, but it remains to be seen if it's a worthwhile investment for them.

If Snap can only offer brand image/awareness type advertising they are not worth what they think they are.

I'm not sure where you're getting this idea that Twitter ads are not very valuable. Empirically, advertising is the one area of Twitter that's growing (total revenue, revenue per user, etc.). Its their user growth that has stalled.

More abstractly, Twitter is very information-seeking / interest-oriented, which seems very ideal for advertising.

I don't know how much small businesses contribute to Facebook/Google's bottomline, but one of the big advantages of Google/Facebook is that creating ads and landing pages is easy.

Just put together a few stock photos, add some copy, pull a free landing page template and you're good to go.

I'm not a heavy Snapchat user, but it seems to me that small businesses will struggle to create creatives for Snapchat ads. Nearly anyone can write, but very few are actually comfortable with a camera. Most small businesses also don't have editing chops or even the sheer creativity to put together a compelling Snapchat ad.

Much of Snapchat's value seems to be in driving top of the funnel awareness, but I'm not sure most businesses have the capacity or even the need for this.

FWIW, whenever I have ventured into the sponsored stories section of Snapchat, I have been shocked at how "amateur hour" / "web enthusiast from 1995 thinking they can design" the content is, even from the large and successful brands that I know have the expertise to do better... I actually think something about this playing field makes it totally viable for random people to complete.

TV advertising is as large as all digital advertising combined. And TV advertising is almost all untargeted brand advertising, if they can get a big chunk of that pie it doesn't matter if a small business can't microtarget users with shitty ads.

How similar is this younger generation to the younger generation of the 90s/early 2000s? Is there any reason to think that because a company "gets" todays younger generation, that they will get the younger generation of 2027?

P2P payments? P2P sales? Games? The messaging system is just a social platform to build the other services. Other chat systems have built similar services.

I don't think P2P sales can justify a $25B valuation.

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