Why Snapchat Looks Different

You may be asking yourself, “What is wrong with Evan Spiegel? Why did Snapchat change their story layout to be annoying for users?”

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You see three parts of an app. I see absolute horror and frustration.

There are always a lot of complaints about change, but maybe it really is for the user experience. Right?  Besides, Facebook has been changing for a while, even when 90% of people are voting against said change, and that hasn’t seemed to hurt their massive success.  Well, the reason that Facebook added newsfeed and Instagram switched to algorithm-based instead of chronologically ordered posts is the same reason why Snapchat now wants to mix up your life (or at least your Snap experience). Unfortunately, I have been unable to find a thorough explanation posted online. The best answer I found was “the alterations were made in order to help the company make money.” That observation is about as profound as, “kids like pizza because they need food to survive:” kind of true, but Brussels sprouts are food and kids hate those.  Is there a better explanation  without asking Spiegel, himself?

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MRW I discover it’s “Brussels sprouts” NOT “brussel sprouts”

It turns out there is a fairly simple answer (spoiler alert: Big Data), but this story needs to last an entire blogpost, so let’s get down into the weeds a bit.

Snapchat’s Challenges

Stories

Snapchat was created in 2011 and became known for its disappearing photo and video messages. People loved the filters, because they were a bit more exciting than something like “Valencia” on Instagram.  Later Snapchat added “stories,” where you could make a post lasting 24 hours for all of your friends to see. They also made “memories,” where you could save photos and videos to your phone if you wanted to look at them later.  However, despite these cool technological features, Snapchat’s competitive advantage did not last long, and Instagram’s stories feature quickly became more successful than Snap’s.

 

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When that friend who is good at everything decides to learn your one unique talent and then is better at it than you.

 

Spectacles

Of course, at least Snapchat didn’t put all their eggs in one basket.  At $130, Spectacles are probably bringing in tons of revenue! Wait, you’ve never heard of them? They’re the glasses that take a photo and send it directly to Snapchat.  Oh okay, so you have heard of them, but you don’t know anyone who ever actually bought them? Yeah, that is probably because they were a complete failure. Logistics were unorganized, and not much effort was put into marketing them. The good idea fairy took control, and Snapchat wasted money on their development.

 

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All three people who actually bought the product.

 

 

Not Profitable

Snap has been running purely off of investments made by people hoping the company would turn profitable.  Since the beginning, they have not had a single quarter in which their revenues exceeded their costs.  In order to be sustainable, they have to turn their business model on its head in order to actually start generating some money.

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If you take the blue out of the purple, you can see they are obviously in the red.

Potential Solutions

Give Up

Whether they like it or not, it is a little late for Snapchat to sell out.  At a market cap of nearly $23 Billion, there are not a whole lot of companies who would be able to pay a fair price for the company, and those who could were rejected.  In 2013, Facebook offered $3B to buy Snapchat, and there were rumors that this past year Google offered $30B. It would seem none of these acquisition attempts were good enough for Spiegel.  That might be fine if he had a really great company and a better offer elsewhere, but there aren’t a whole lot of other corporations with bigger wallets than Google or Facebook.

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Spiegel refuses to be a pawn

Go Global

Snapchat often makes “exciting” announcements about how many users they have gained in the most recent quarter.  Who cares? Their cost per user is more than their revenue per user in the affluent market space they currently occupy.  If their business model isn’t working in the most profitable parts of the world, why would they think moving into the least profitable parts of the world would suddenly change that? Snapchat would need to create a low-tech, low-bandwidth version of their app, thus incurring more costs, diluting the brand image, and gaining even more debt.

 

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Not a whole lot of Snap stories coming from Africa

 

Gather Data

Snapchat’s traditional business model is not good at gathering data for advertisers.   Right now I don’t subscribe to any publishers, skip all the ads in the first second of watching them, and just use the app to exchange messages with my friends.  Snapchat doesn’t get a whole lot of usable data from me.  Their new model aims to change that.  Facebook and Instagram can create a data web of likes for pages, groups, photos, videos, and events; Snapchat hopes to create a similar web of data as they monitor how you interact with publishers and advertisers.  Their new layout makes these interactions feel more organic and feel less like a hidden feature, thus increasing the likelihood of clicks.

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Snapchat can’t afford to think purely like engineers anymore. They can add all the features (filters, stories, etc.), add hardware (spectacles), and even be really fun; but if they have no way to monetize their app, they will die.  They have realized this grave truth and are trying to step up their game.  Only time will tell if they corrected their course too late.

9 comments

  1. I didn’t realize Instagram stories outperformed Snapchat stories already! Personally, I am still loyal to Snapchat stories but I guess that also isn’t really helping them since I only use it to exchange messages with friends just like you. I have noticed that Instagram stories do have a lot of cool features though. Nonetheless, your post gives great details on why Snapchat needed this update. One comment a friend of mine had about the new update was that if we think about it, it makes sense that stories were now integrated into the same place where you receive snaps. It makes more efficient use of that space. If you aren’t someone who receives more than 10 snaps at a time, then each time you check that space, you only really use the top half of the screen where the first few snaps you received are located. Even if you do receive more than 10 in a day, most of us check it frequently enough that they don’t add up to much more than 10 each time we check. Integrating the stories and snaps received now consolidates that space and also makes it easier to access the panel where the advertisers are located. I didn’t like the update at first, but I think change is always hard and people will eventually come around and get used to it.

    1. I certainly hadn’t considered the “wasted space” idea. It does make sense, though. You’re right. At most, in the old layout I only needed to look at the first 5 or so names on the message list. And your comment about Instagram’s better story features is one reason analysts say Snap is being outperformed.

  2. This is a great and timely post. I know throughout my time using Snapchat there have been many iterations but this one seems particularly difficult to use and is the only time I, and other people I have talked to, have considered not using Snapchat as much or even at all. After watching that Ted Talk about design and how long it took just to reinvent the Like button on Facebook, I am interested in how the design process went and how long they have been working on this new design. In addition, I wonder what their conversation about trade offs was.

    I think you also bring up a great point about the change in design being related to the need for profit. At some point Snapchat has to stop relying on users and snaps sent, and they will have to start making profits in order to continue to receive investment. While Facebook and Instagram do seem more conducive to ad revenue, Snapchat must innovate and find a way to capture ad revenue while not hurting user experience.

  3. Bobby, I loved the lay out of this post. Your commentary, as well as images were well thought out and flowed perfectly. You obviously spent time investigating Snapchats reasoning behind this update, and I must say I am surprised they have not released further commentary especially with the amount of negative feedback they have been receiving. Your post further surprised me at the mention of both Facebook and Google offering big loads of money to buy the app and Spiegel rejecting them. I wonder if Spiegel has some massive plans for the app that need time to be executed. Like you mentioned, if these plans don’t monetize the app then he made a BIG mistake. (To be honest, I am hoping for this app to fade away. One less social media app sounds fantastic to me!)

    1. I’m totally with you on your last comment: I would love to have less social media accounts without losing out on contacts/news/info. I wondered the same thing about Spiegel. Does he have an Ace up his sleeve; is he too cocky about his app’s abilities; or does he not really care, because he would rather live an interesting life in charge of a billion dollar company than sell it off and be bored to tears?

  4. I’m very impressed with how well you detailed the challenges that Snapchat faces as it moves forward. Indeed, they are a company that presents little to no compelling value over its competitors these days, especially when compared to the elephant that is Instagram and that company’s implementation of the Stores feature. It’s no surprise that the company has been on a decline since its IPO with no clear path to profitability.

    I’m a part of their beta release program, so I’ve seen these changes months ago. To me, the randomization and change-ups in regards to the platform seem symptomatic of the struggles the company faces to stay relevant. While it may be a hard proposition to swallow for the company leaders, it seems that they missed the boat on buyout offers that look much better now than they had initially. And while a recent earnings call did place the company back on the radar of many investors, a closer examination shows that they are is still burning cash reserves in order to stay afloat.

    In my opinion, the best option out of the ones you described would be to implement better data-gathering techniques. I agree that it’s far too easy to avoid and ignore the ads on the platform right now. Since the main draw for the company is to increase ad exposure, the key will be to make ads more relevant for users and much less intrusive. Don’t separate ads from friends much like how “Sponsored” Insta posts are intermingled with original content in the Insta feed. Only by implementing this big change can Snapchat hope to become the golden goose investors hope it one day will be.

  5. Bobby, such an amazing post! I laughed out loud multiple times as I scrolled down the blog, especially whenever I saw the gifs (they just fit the post’s content so well). Since 2017 summer, I have noticed that Snap has been continuously underperforming financially, resulting in a significant loss for not meeting its quarterly expectations. Personally, I no longer check Snapchat often, because Instagram literally has its functions, but better. In addition to Instagram’s ability to present more relevant, audience-conscious contents for its “Explore” tab, I believe having more user base was another major reason why Instagram won. At first, I thought Snapchat story was more original, and cool. But I saw more people using Insta stories, and as a result I started using it as well. The purpose of putting up a story is to show others what you’ve been up to recently, and posting that on a social media platform with larger user base would make more sense to reach more people. Honestly, I am very skeptical about the possibility of Snap’s comeback, and they would be lucky to find a bidder that will buy them at a fair price. I hope they don’t end up being the next Yahoo that ended up losing so much potential gains in selling their business to Verizon.

  6. Nice post. I confess that I have been skeptical of Snapchat for a long time. It’s a beautiful interface, but you rightly point out that the monetization aspects so far have been elusive. I don’t think they currently provide enough value to advertisers to rival Facebook or Google. Like it or not, those are the standards these days. I think it will fall into more of a “nice” social networking platform, like Twitter.

  7. I think this was a great post and I really enjoyed reading it! As someone who often forgets that stories exist and either watch no one’s stories or my entire friends list’s feeds because I’m really that bored, part of me understands why they’re shoving the stories feature more in your face by integrating it with regular snap messaging. That said, I do find the new set up extremely annoying and the algorithm for who to put at the top of your feed pretty arbitrary. While I understand that Snapchat has to make changes to monetize their business model more effectively, but I don’t see why they can’t do that in a way that at least accepts who your friends are and who you’re actually communicating with. When the update first came out, my roommate complained to me that the people showing up at the top of her feed were her ex-boyfriend and some random girl she met once over the summer; considering that Snapchat is suggesting unsavory relationships and randos over people you actually talk to, I think that this could hurt them more than help in that it could lead people to use the app less entirely.

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