Snapchat attracted social media users with its vanishing messages—but now it’s users that are disappearing.
On Tuesday, the company reported its first user decline during its earnings call, telling investors that within three months, it lost 3 million daily active users.
Snapchat’s daily user numbers shrank 1.5 per cent to 188 million in the second quarter of 2018, down from 191 million in the previous quarter, the platform’s owner Snap said. The company also lost daily audience in its most valuable market, North America.
Here are three takeaways from Snapchat’s disappointing news:
1. Listen to your audience.
Evan Spiegel, Snap’s CEO, blamed much of the poor results on an unpopular redesign that was released six months ago that was so unpopular social media influences like Kylie Jenner openly expressed their disappointment. Mix that with a controversial ad shown on Snapchat making light of domestic abuse involving the pop star Rihanna, and Snap just can’t seem to get things right lately.
Spiegel said during today’s prepared earnings call remarks that it took users’ feedback seriously. “We feel that we have now addressed the biggest frustrations we’ve heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people.” Still, this marks the first time the company’s lost users since going public, and it won’t be easy to gain them back.
Marketers know that the cost of keeping a customer usually outweighs the cost of acquiring a new one. The same is true in PR matters: It’s far easier to maintain trust than it is to gain it back from scorned consumers.
2. Stay competitive.
Snapchat’s rapid user growth and popularity earned the app a plethora of headlines and interest from investors. However, Facebook imitated Snapchat’s most coveted feature, debuting Instagram Stories in August 2016.
With the feature on both Instagram and Facebook, social media users can have the option to send disappearing messages easily to their already-established list of friends and user bases. The features are also friendly to brand managers, especially those who struggle to find a footing on Snapchat.
… [E]verything looked like it was growing rapidly ahead of Snap’s initial public offering, and Facebook investors were concerned that Snap — which had refused Facebook’s acquisition offers — might steal away the social giant’s users. Facebook responded by building Snapchat’s best feature, Stories, into all of its apps.
It looks like Facebook is safe after all. Not only did Snap’s total daily audience shrink, but so did its daily audience in its most valuable market, North America. That’s where the advertising industry is developed and Snapchat users generate more than three times as much in revenue as they do in Europe. Snapchat’s North American daily active users declined to 80 million from 81 million the prior quarter.
With Instagram reporting 300 million daily active users on its Stories feature (the company was also recently valued at $100 billion because of the time users spend on it), Snapchat is falling farther behind its biggest competitors.
Snapchat has defined itself in opposition to the internet establishment.
… Now, though, Snapchat is borrowing liberally from the internet conventions it has scorned. Snapchat is — irony alert — copying Facebook by refashioning its advertising business for companies that want quick payoffs from their ads. It’s tracking people to prove those messages worked. And Snapchat loosened demands for tailor-made video programs, which makes it more like the rest of the web.
You might have a great idea, but unless you stay competitive, you’ll soon find yourself last in the race to win consumers’ attention.
3. Users represent greater long-term opportunities.
For social media platforms, user counts represent potential dollar signs.
It’s how companies such as Facebook, Instagram and Snapchat make money, from either sharing user data with marketers for greater audience targeting or offering ads served up to its large and engaged platform.
Users are such a crucial element of social media platforms’ success that any perceived stagnancy or drops can put a huge damper on its financial forecasts. Facebook stock recently tumbled in the largest single-day market dropin history after the company reported disappointing revenue growth rates, along with a stall in user growth.
Even though Snapchat lost users, the company’s revenue is strong.
Despite the drop, the company’s revenue has actually increased 44 percent in a year. Last year in the second quarter, the company made $182 million while this year the revenue was $262 million.
However, without users to spur future growth, investor favor can quickly go south.
What’s even more concerning is users’ attitude toward Snapchat. What once was a platform beloved by younger users is falling behind—especially among celebrities and influencers.
“Even Kylie Jenner, who once loved Snapchat, launched her own makeup filter on Instagram last month without building one for Snapchat,” The Verge reported. “That loss might matter more than some angry users.”
What do you think of Snapchat’s user number decline, PR Daily readers?