Snapchat rising: is the youthful app headed for Facebook-sized success?
The ephemeral app is set to go public, could be worth $25bn, and is seen as the only serious challenger to Facebooks audience. But can the ascent continue?
What is the value of Snapchat? The notoriously secretive parent company of the ephemeral messaging app is about to find out. Snap Inc has this week released paperwork designed to drum up interest in its initial public offering, scheduled for March, which some analysts say could value the company at between $20bn and $25bn making it one of the biggest technology offerings in recent years.
Snapchat was created in September 2011 as a selfie app that let users share pictures that deleted themselves once theyd been viewed. It quickly developed a reputation as a sexting app, although this wasnt representative of how the app was actually being used.
A lot of people misunderstood what it was about early on, thinking it was for sending naughty pics. But the value is that when you know stuff you share is not going to be part of a permanent online record, you can be a lot more casual, raw and honest, said Jan Dawson, founder of Jackdaw Research.
It doesnt have to be that perfectly framed selfie or the picture of your lunch that looks amazing. It can be the a picture of the new zit that popped out or the fact that you put on odd socks because it was dark.
The rawness was an appealing antidote to the highly curated environments of Facebook and Instagram.
I like Snapchat because its more chill [than Facebook], its not forever, said 14-year-old Lila, an active Snapchat user. You can post funny videos and stuff and I like that you can talk to people without having a conversation, you can just send them a picture.
Snapchat has since evolved its product offering, adding even more creative tools to enhance the camera and chat functionality, allowing 2.5bn Snaps to be created each day. Its also launched Snapchat Stories, where users collect Snaps together in chronological order. This allows individuals, brands and media companies to tell their stories to larger audiences, and its the key area for selling advertising.
The Stories section has allowed for social media stars to emerge on the platform, such as 27-year-old Cyrene Quiamco (username CyreneQ), who has more than 100,000 followers. Advertisers pay her between $10,000 and $30,000 to tell stories about their brands through a series of short videos.
Quiamco typically creates games and challenges, encouraging her followers to interact with and respond to her content.
My content is fun and lighthearted. I do a lot of games. So I ask people to take a screenshot of my videos, then ask them to draw on it or create stickers. Its fun, lighthearted and interactive, she said.
For example, she worked with Walmart to promote Black Friday by asking her followers to pick a present for her mother, whose birthday coincides with the annual shopping extravaganza. Her followers sent her their ideas, which she re-posted to her story channel, before she picked her favourite and gave the present to her mother.
She does around four such commercial deals each month, as well as speaking gigs and consulting that nets her around $500,000 per year.
I still cant believe all of this is happening, she said.
Despite it looking a bit like a media or messaging company, Snap describes itself as a camera company, something it reiterated in the IPO filing today.
In the way that the flashing cursor became the starting point for most products on desktop computers, we believe that the camera screen will be the starting point for most products on smartphones. This is because images created by smartphone cameras contain more context and richer information than other forms of input like text entered on a keyboard.