It wasn’t long ago that Snapchat was the hot new arrival on the social networking scene. Its fast rise and bright future were made possible by the platform’s strong appeal among millennials and generation Z. As of early 2016, a whopping 63 percent of its user base was between the ages of 13 and 34, according to Ad Week.
That strong performance among younger consumers made Snapchat marketing a tantalizing opportunity for any business seeking the attention and engagement of younger consumers. But as the company has grown and worked to develop its advertising platform, it is facing new challenges: While its strong performance among younger consumers made it an attractive platform in the first place, its struggles to build a broader, more diverse audience is creating limitations for Snapchat advertising opportunities.
As Digiday notes, too many advertisers are ignoring the niche audience of Snapchat in favor of larger platforms like Facebook, where audience targeting tools make it easy to find niche audiences on a bigger scale. Those advertisers, by and large, see Snapchat as an optional marketing channel, whereas giants like Facebook and Google are seen as essential. This reluctance to spend on Snapchat contributed to a $443 million loss for the company in the third quarter of 2017.
What’s worse, Snapchat’s growing pains show no signs of letting up: The social network is caught between what made it successful and what it wants to become, and they’re stuck in a perilous middle ground that offers only niche appeal to marketers. But rather than try to peddle marketing solutions that their audience isn’t buying, Snapchat is making aggressive moves to meet marketers’ expectations and recapture some of the appeal that once made the social platform a rising star.
Meeting Marketers’ Demands for More
In general, the constraints created by Snapchat’s platform exist on two levels. One is the niche audience accessible through its marketing products.
In terms of its audience, Snapchat’s strength among younger US consumers hasn’t diminished. A survey from Edison Research found that, among 13-to-24-year-olds, Snapchat was used by 79 percent of respondents, beating out every other social platform. Yes, even Facebook. Meanwhile, its active user base has grown every quarter from the start of 2014 through the third quarter of 2017.
Those are great numbers. It’s easy to see why Snapchat is considered a major social platform and a potential rival to Facebook. The problem is that this success hasn’t expanded beyond young US users. A survey by Snap Inc. (Snapchat’s parent company) found that only 12 percent of consumers ages 35 to 54 are active Snapchat users. Among the 55-and-over crowd, only 2 percent have accounts. This might change as Snapchat’s active user base gets older, but at the moment its poor adoption among older consumers is restricting its growth opportunities.
Meanwhile, a survey of the most popular social networks among global users shows a stark divide between US and international consumers. Among a global audience, Snapchat’s 255 million active users ranks 15th overall, trailing not just domestic giants like Facebook and Instagram but also platforms that are essentially unknown to American consumers, including WeChat, QQ, and Sina Weibo. Snapchat’s domestic success has yet to translate into a significant international audience.
The second critical limitation affecting the company’s success is the types of Snapchat marketing products the platform offers to brands. As Marketing Land reports, Snapchat recognizes that marketers are seeking more sales-oriented ad products, and the company has rolled out several new solutions aimed at meeting these demands. Context Cards are one such solution: These text-based addendums to visual content can provide links, business reviews, reservation options, and other information that provide context for the visual content and offers its own call-to-action for consumers. The Context Cards also come with performance metrics to help marketers track results.
Context Cards are a free add-on for any brand purchasing Sponsored Geofilters or Sponsored Lens, which provide illustrated overlays and augmented reality graphics for Snapchat content. It’s notable that the Context Cards are free, rather than a paid addition, suggesting that the company feels pressure to provide more value through their advertising.
Building a More Brand-Friendly Platform
In the short term, Snapchat is doing all it can to increase advertiser appeal by creating new, dynamic forms of content. Over Black Friday, the company rolled out luxury Promoted Story ads that cost $250,000 a pop and were delivered to every single Snapchat user in the United States, according to Ad Age. For some deep-pocketed brands, this advertising channel offers great value, and the ability to reach a large, predominantly young audience is worth the investment.
But to sustain long-term growth opportunities, Snapchat knows that even mind-blowing marketing products will only be part of the solution. The bigger key to sustained success is the problem which the platform is having a tougher time solving. It needs to continue growing its user base and broadening its audience to attract more types of brands. Until then, as Digiday notes, the platform is unlikely to attract larger shares of brand marketing budgets beyond the 10 to 20 percent reserved for “experimental” campaigns.
That’s not where Snapchat wants to be: It considers itself a platform worthy of tapping into that 80 to 90 percent of budget that represents mainstream marketing dollars. The company is having success creating new, dynamic solutions that offer unique opportunities to its brands. But even Snapchat’s executive leaders will tell you its focus is on growing its user base. If it can’t build a mainstream audience à la Facebook and Instagram, those mainstream revenues will remain out of reach.
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BiographyMore Content by Jonathan Crowl