If there was ever a year for Snap to take a bite out of Instagram’s market share, it was 2018. With Instagram’s parent company Facebook besieged with one privacy scandal after another, Snap had ample reasons to convince wary Facebook users to ditch one of the company’s apps entirely for Snapchat.
Yet Snapchat is on track to end the year with fewer daily active users than it had last year — it ended Q3 2018 with 186 million DAUs, compared to 187 million in Q4 2017. Its parent company Snap’s stock price has fallen from $16.21 per share last December to $5.18 per share Wednesday morning. To cap it all off, Snap is still losing money at an alarming rate, and according to at least one projection, may run out of money before it becomes profitable next year.
That leaves CEO Evan Spiegel with quite a long to-do list for 2019, to say the least. He’s said in earnings calls that he still thinks Snap can turn a profit in 2019 — but it will be a serious stretch goal. Here’s what will need to be at the the top of Snap’s to-do list in order to make that happen.
Ship the long-awaited Android redesign
In order to counteract near-stagnant user growth in its two biggest markets, North America and Europe, Snapchat needs to add users in other parts of the world. For the past few years, it’s failed to do so at a big enough clip — in Q3 of this year, 25.3 percent of Snapchat users came from outside of North America and Europe, compared to about 21.3 percent three years ago.
The problem is that most smartphone users in places like Southeast Asia rely on Android, not iOS. And Snapchat’s Android app has been notorious for being buggy and glitchy. Snap has been repeatedly telling investors this year that it’s developing a new version of its Android app, and that the company is making good progress — but that new version has yet to be rolled out.
Getting that Android app out sooner rather than later will be important in proving to investors that it’s ready to make serious headway in developing markets. In an internal memo leaked to the website Cheddar, Spiegel highlighted India, Indonesia, Mexico, Brazil, and the Philippines as international markets that Snapchat is particularly interested in because of their large young adult population.
Attract more 34+ users
Attracting a higher number of older users is another priority Spiegel outlined in the memo obtained by Cheddar. He chalked up the company’s failure to gain greater market share among older users as a “marketing and communications challenge” during the company’s last earnings call. To attract these users, the company is pitching Snapchat as first and foremost a “fast way to communicate visually and with close friends.”
Debra Aho Williamson, a principal analyst with eMarketer focusing on social media, told VentureBeat that the biggest issues Snapchat faces in attracting older users is that some of its core unique features — ephemeral videos, filters, and lenses — are not intuitive to older users who are used to Facebook. Just look at how much difficulty Facebook has had in getting its users to adapt to Stories compared to Instagram, where the audience skews younger.
“One feature that I do think could help gain traction [among older audiences] is on the content — on the Discover side,” Williamson said. “If they start to partner with more publishers that are aimed at a slightly older audience — that could help a bit. But it’s hard to say how much it will help because all the social platforms are offering video content in one way or another.”
Counter the narrative that it’s become a ‘ghost town’ among younger users
The 13 to 34 year olds are still Snapchat’s most dedicated users. But they were also the most vocal critics of the app’s redesign earlier this year — the most high profile being Kylie Jenner, whose tweet complaining about the redesign caused Snap’s stock value to drop $1.3 billion in February.
While Snap attributed a 2 percent loss in Q2 DAUs to disruption caused by the redesign, the company said that it felt it had addressed the biggest frustrations with the redesign 6 months after the rollout.
And there are signs that Snapchat has weathered the worst of the storm. Brian Wieser, an analyst with Pivotal Research, told VentureBeat that Pivotal’s analysis of Nielsen’s digital content ratings showed that consumption of content on Snapchat increased 36 percent during the month of October, after having decreased every month since March.
“Prior to this month’s data, [Snapchat] was being used by more people but less frequently,” Wieser said. “The October data suggests more people and more frequently.”
Still, it’s not hard to find a new article or tweet every month proclaiming Snapchat to still be a ghost town. The app can’t afford another another disruptive rollout like what happened with the redesign. The company also needs to double down on building closer relationships with influencers — Snapchat needs these influencers to keep their audience of typically younger users on the platform, instead of decamping for Instagram. Snapchat made a focus of that this year by giving creators access to more analytics, as well as a tool to highlight products to their followers.
Getting more advertisers off the sidelines
This year, Snapchat continued its transition to a programmatic ad buying model — a necessary move, given that that’s the model the rest of the industry is using. It’s now easier for advertisers to buy ads on Snapchat, but it’s also made them cheaper to buy. As a result, advertisers are buying more on Snapchat, but because ads are cheaper, its ad revenue growth rate is slowing. eMarketer predicts that Snapchat will generate just over $662 million in U.S. ad revenue this year. That’s an 18.7 percent increase from last year, compared to a 85.6 percent increase the year prior.
Increasing ad revenue will really depend on how well the company succeeds at its other goals. Getting more users outside the U.S. will help the company attract more international advertisers, and adding older users might convince advertisers to turn to Snapchat to reach demographics they’ve never typically advertised on Snapchat to reach.
Williamson said that Snapchat has also benefited from advertisers growing more comfortable designing for its unique features — shooting only vertical video, shooting in six-second segments, and designing lenses and filters. “It’s still somewhat of a concern, but maybe not as much as it was a few years ago,” Williamson said.
That’s because Snap finally launched a desktop app this year, Lens Studio, that gave agencies and artists the ability to create their own sponsored AR Lens. It’s also because with Instagram and Facebook having copied Snapchat’s Stories feature, there are now more platforms for which brands have to design the types of ads that were previously only found on Snapchat.
Snapchat has also launched a Lens Creative Partners program this year aimed at connecting businesses who haven’t created sponsored Lenses before with certified AR creators. Expect more efforts like these from Snap in the coming year to give advertisers more access to the creatives who are most familiar with creating sponsored content on Snapchat.
Reduce employee turnover
Snap’s retention woes can pretty much be summed up by one story in 2018. According to Bloomberg, Spiegel promoted Snap’s VP of global business solutions Kristen O’Hara to its chief business officer. Then, two days later, he changed his mind, bringing in Jeremi Gorman from Amazon to fill the role. O’Hara ended up leaving the company.
In 2018, Snap also lost its chief strategy officer, VP of marketing, VP of content, VP of product, and chief financial officer. In an employee survey obtained by Cheddar, 40 percent of the nearly 3,000 respondents said that they didn’t plan to stay at the company for very long. Snap’s culture of secrecy — employees are often kept in the dark about what other teams are working on — and Spiegel’s decision to push forward with the redesign, have reportedly rubbed employees the wrong way.
According to Bloomberg, Spiegel has started calling more all-staff meetings, and visiting with more employees during the workday, in an attempt to improve communication. But morale-boosting exercises can only convince so many employees to stay if the company’s stock price continues to drop so dramatically.
The audio problem: Learn how new cloud-based API solutions are solving imperfect, frustrating audio in video conferences. Access here