Five years ago, Snapchat’s parent firm Snap floated on the New York Stock Exchange in what was hailed as a milestone for the once-disruptor in the social media landscape. The plucky underdog – at least compared to other messaging and social media apps – listed at $24 a share in an IPO twelve times oversubscribed.
Fast forward, and that’s where shares are today. The last few years have been marked not with go-go share price growth but with competitors like Tiktok becoming the young consumers app of choice.
So where now for Snap? The answer, for now at least, appears to be innovation. The firm seems to be moving on fast from its core product – a messaging platform in which users can share photos, videos and messages, which are then deleted by default.
The company is now putting its eggs in a virtual shopping basket, going full steam ahead with its augmented reality (AR) offering, Snap’s UK general manager Ed Couchman told City A.M.
Since January last year, more than 250m Snapchatters have engaged with its AR shopping ‘Lenses’ feature, which essentially allows users to ‘scan’ the world around them to shop and play. The offering varies from scanning a dog to find out what breed it is, to scanning a product you want to buy on Amazon.
From a partnership perspective, Snap has also been developing brand relationships to build augmented reality shopping experiences. Makeup giants MAC and Estee Lauder have already bought into Snapchat’s tech, allowing users to try on products virtually and ordering a seamless process end-to-end.
Commercially, this is lucrative for both Snap and brand partners, driving more users to the app and cashing in on whimsical try-ons that turn into purchases.
Revenue was up 38 per cent in the first quarter to $1.1bn (£891.4m), with revenue from Dynamic Ads more than trebling, as advertisers push product catalogues on the Snap platform.
The key differentiator from Meta’s approach is that AR is all about “adding digital to the real world”, rather than shifting away from it, Couchman explained.
“Our view is to make the real world better rather than entering a new one”, he said.
For all the business’ history in messaging, most intriguing for Snap’s future might be its so-called Discover feed, which pushes news and other content to users’ phones; a valuable tool for a company whose main driver for revenue is advertising.
‘We’re a camera company’
As reports continue to circulate about the metaverse running rife with abuse, Snap must refine its own distinctive approach of what online safety looks like in an AR world and is working on how to protect the 90 per cent of 13-24 year olds that it appeals to.
On top of this, as more and more companies tap into virtual shopping, Snap must decipher what makes its AR offering stand out, without alienating its fundamental Gen Z and X demographic, which may be increasingly tempted by the video reel fun of its exploding Chinese rival.
Although the firm is often cast as a social media firm, Couchman asserted that Snap is more of a “camera company”, explaining that the customer experience hinges on this video and photo taking function.
Speaking with City A.M., tech analyst at Enders Analysis Niamh Burns said: “The camera company designation could be seen as a bit of a gimmick really, but it is a way of signalling to users and advertisers that they are trying to do something a little bit more creative with augmented reality”.
However, even if Snap doesn’t wish to see itself as a social media app at this point, the elephant in the room is the impending Online Safety Bill making its way through parliament with eyes on protecting young users online.
Like many of the big firms, Couchman asserted that privacy and safety is “part of our DNA”, and welcomed any legislation that was “practical and proportionate”.
“Snap was built as an antidote to social media when formed”, he told City A.M., pointing to Snap’s distinct approach of deleting images and messages sent by users, as well as not having like and dislike functions