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Snapchat Floatation: What Will Change?

February 5, 2017

 

Towards the end of 2016, Snapchat’s parent company (Snap Inc.), filed documents to begin the process of going public. The company is expected to launch its IPO (initial public offering) sometime in March 2017. Valued somewhere around $25billion, the photo and video messaging service is a social media marketers dream. However, could Snap Inc.’s rumoured IPO bring changes for its users and for your marketing strategy?

 

So, What Is Snapchat?

 

Snapchat is a messaging app where users can send pictures or video to each other. Snapchat users can send either snaps (between two individuals) or stories (between an individual or business and their followers). Snapchat captured the imagination with its instantly deleting messages. When a user sends a snap, it deletes permanently once the recipient has opened it and stories disappear after just 24 hours. Snapchat’s popularity with millennials has made it the go to tool for marketers.

 

Revenue Streams and Easier Access

 

To date, Snap Inc. has made significant losses, drawing parallels to Twitter’s public listing in 2013. Pre floatation, Twitter was running at a massive loss and its revenues were relatively modest. Following its debut on the New York Stock Exchange, revenues have soared (however, Twitter is yet to turn a profit). We are likely to see this trend continue when Snap Inc. go public. Shareholders want to see a return and therefore revenue streams are expanded upon. Advertising is Snap Inc’s largest revenue stream and it is likely that the company will look to capitalise on advertising revenues. For small businesses, this is positive. Like Twitter, Snap Inc. could well simplify the process of advertising on Snapchat, allowing you promote to your products and brand more simply.

 

The Product

 

Snapchat is a great product. It is engaging and has a daily user base of over 150million. However, Snap Inc’s IPO application papers describe the company as ‘a camera company’. Not the product we know, right? Snap Inc. launched Snapchat glasses (specs that allows users to send snapchats on the go) last year, however could there be more to come? As Snap Inc. go public, they may look to grow revenues and retain customers by launching new products and services. This has potential to offer businesses small and large new, creative ways to advertise. 

 

The Price of Advertising

 

When the television was introduced as a new marketing platform, costs were sky high. As more and more channels sold advertising space, the price was pushed down. Today, social media marketing is dominated by three major forces; Google, Facebook and, to a lesser extent, Twitter. Snap Inc’s IPO and what we assume will be a greater focus on advertising looks set to add a fourth competitor into the market. This is likely to be good news for small businesses as it may trigger a price war, with the four advertising super powers looking to convince you to advertise on their platform. In turn, this may bring down the cost of social media advertising. 

 

Audience Numbers & ROI

 

Snapchat and Snap Inc. is by no means an unknown company hiding in a back office in deepest darkest silicon valley, however, its reach is considerably smaller that that of giants like Facebook. Snapchat requires a certain level of smartphone literacy that slightly restricts its mass appeal. However, an IPO will generate significant media coverage which may have a positive impact on user numbers. A larger audience is always good for marketers. Snap Inc’s IPO may just offer your small business the ability to advertise to an even larger audience and increase marketing ROI.

 

Keep up to date with Snap Inc’s IPO on the 95 Social Blog. We will have continued analysis as this rising social media giant aims to become one of Wall Street’s largest ever technology floatations. 

 

If Snapchat sounds like the social media platform for your small business, don't hesitate to get in touch with our social media managers. We work with Snapchat every day and can help your small business get the most out of this booming platform.

 

Contact us here: hello@95Social.co.uk

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