Snapchat, the shiniest new object in social media (at least as far as publicly-traded companies go), held its first earnings call since its initial public offering (IPO).
Snapchat reports its userbase by quarterly averaged daily active users, meaning the number of users who are active daily on average throughout the quarter.
What we see is Snapchat’s growth in early days of its reporting over the last year. An interesting note is that its growth, quarter-over-quarter, is in the 3-5% range. This is the same growth rate as more mature social networks like Facebook, raising the question of whether Snapchat is already saturated or not. Time will tell, but compare Snapchat’s early reported numbers to Facebook’s numbers when it first went public; Snapchat’s growth rate is half of what Facebook’s was in 2010.
Snapchat’s revenues mirror what we typically see of all social networks; advertising dollars ramp up in Q3 and Q4, then fall in Q1:
It’s too early to tell any significant trends in Snapchat’s revenues; however, one point of note is that Snapchat is heavily dependent on good high-speed mobile access. They’ve focused their efforts on North America and the EU markets as a result, excluding other markets as focuses for now.
A more useful benchmark is average revenue per user (ARPU):
The “gold standard” of social networks is typically $2 per user; Snapchat is far below that revenue mark right now and will need to substantially increase monetization in order to be financially competitive with its peer networks.
What do these results mean for you?
For Snapchat to be viable in the long run, it will need much better monetization. Currently, advertisers still need to cross hurdles to advertise, and measurement is still far below what other social platforms offer.
What else did Snapchat reveal?
The part of the earnings call which probably inspired the least confidence was that unlike other social networks’ earnings calls, CEO Evan Spiegel danced around what Snapchat’s roadmap is. At 43 minutes into the call, an investor asked what innovations could be coming, and Spiegel remarked:
“Yes I think at this point we’re kind of famous for not giving guidance on the product pipeline but we’re obviously excited about it and we love surprising our community so should be a fun rest of the year.”
Given how quickly Facebook is working to copy Snapchat’s features and integrate them into its core platforms, Messenger, and Instagram, I’d be hesitant to recommend making Snapchat the dominant part of any social media strategy. Participate if your audience is present and active, but look to Facebook’s offerings for more robust advertising options and analytics.
We’ll see what else Snapchat has in store for products that support what marketers and communicators want to achieve, but for now, it’s part of a social strategy but not the heart of one.
Christopher S. Penn
Vice President, Marketing Technology