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Snapchat Vs. Facebook from a First Mover and Fast Follower Standpoint

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Snapchat Vs. Facebook from a First Mover and Fast Follower Standpoint / Tech / #AllThingsMobile AUG 14, 2017 @ 11:30 AM 5,104 Snapchat Vs. Facebook From A First Mover And Fast Follower Standpoint Amit Chowdhry , CONTRIBUTOR FULL BIO Opinions expressed by Forbes Contributors are their own. In an increasingly competitive social landscape, Facebook and Snap must rapidly innovate and develop brand new features to retain its users and attract new ones. And both companies also need to constantly decide when to embed more familiar features within their own platforms and formats. Founded six years ago in Los Angeles, Snapchat’s parent company Snap has come a long way. Snap went public in March 2017 as one the largest tech IPOs since Alibaba in September 2014. Currently, Snap is valued at over $14 billion — which is larger than brands like Burberry, Coach, Hasbro, Macy’s, Nordstrom, Ralph Lauren, Rite Aid, Tiffany & Co., Twitter, Viacom and Xerox. Snapchat Stories As A First Mover Snapchat has historically held the first mover advantage in the ephemeral messaging and vertical video space. From its inception, Snapchat has also had an aggressive product innovation strategy, launching colossal features ranging from Stories to Lenses to Face Swap in a quick time horizon. One of Snap’s biggest engagement drivers is Stories, a feature that launched back in October 2013. Snapchat Stories allows users to create a chain of photos and videos that can be viewed an unlimited number of times within 24 hours. Snapchat Stories are now a focal point of the app and it contributes to daily active users (DAUs) spending an average of around 25 minutes a day on the platform. Each individual user has access to “My Story” and can join community “Live Stories.” Plus there are Publisher Stories that can be created by Snap’s publisher partners. In a Form S-1 filing, Snap revealed that over 25% of its Daily Active Users (DAUs) post to their Stories per day. Snap was also a first mover with the launch of Snap Map. Launched a few weeks ago, Snap Map is a feature that helps users view in real time where friends are and discover content around the globe. When users log in they are able to pinch and zoom out to view a comprehensive map and have the ability to browse users who opt in to share their location publicly. The Snap Map feature is largely based on Snap’s acquisiton of Zenly, a location-sharing startup for between $250-300 million in late May. Clearly, Snap created a goldmine and unlocked a new paradigm that resonated with users. But from a business strategy standpoint, companies should have a deliberate focus on when to be the first-mover and be prepared for the competitive response as well as when to be a version of a fast-follower in order to amplify customer engagement especially as competition accelerates in the social domain. Facebook/Instagram As A Fast Follower The bulk of Snapchat’s user base is a highly coveted demographic of people in North America between the ages of 18 and 25. And it is one of the biggest reasons why Facebook made an offer to buy Snapchat for $3 billion back in December 2012. Snap’s founders turned down the offer because they believed trading the ability to build its business for short-term gain “wasn’t very interesting.” Immediately after the offer was declined, Facebook launched an app iOS called Poke for sending ephemeral photos, videos and text — which was seen as a fast follower response to Snapchat. Poke failed to gain traction and it ended up being removed from the Apple App Store within a couple years due to a lack of traction. Facebook continued to copy some of Snapchat’s most popular features into some of its apps. For example, there are now filters similar to Snapchat Lens in Facebook’s main app, Messenger app, WhatsApp and Instagram. And Instagram launched Instagram Stories in August 2016, which has grown in popularity at a rapid pace. As of June 2017, Instagram Stories passed 250 million DAUs. Shortly after Instagram launched Stories, TechCrunch’s Josh Constine interviewed Instagram CEO Kevin Systrom about how Snapchat pioneered the format. “Totally… They deserve all the credit,” said Systrom. “When you are an innovator, that’s awesome. Just like Instagram deserves all the credit for bringing filters to the forefront. This isn’t about who invented something. This is about a format, and how you take it to a network and put your own spin on it.” Snapchat has stayed steadfast on its innovation path by launching features like geofilters, publisher stories, trophies, video calling and Spectacles. In March 2017, Snap also launched Search for Stories for users to find public Stories. Snap also removed the 24 hour lifespan of user-generated content at the same time. Through the search feature, Snap users can find over one million Stories to view community created Stories based on topics and events. This is an essential feature because the search utility is a core component to many social apps and video apps such as YouTube. A Snap banner hanging at the New York Stock Exchange for the IPO debut. (Photo credit: BRYAN R. [+] Snap generates revenue primarily from advertising (sponsored geofilters, Lenses and publisher partners in the Discover section) within Snapchat. Snap’s revenue in 2016 was $404.5 million, up from $58.7 million in 2015. However, the company saw net losses of $514.6 million in 2016 compared to $372.9 million in 2015 largely due to the cost of revenue (i.e. cloud computing necessary to handle the load of millions of users sending photos and videos every day). Snap held its second investor call on Thursday revealing that Snapchat is hitting 173 million daily users. In the past three months, Snapchat added 7.3 million new daily users and the average daily user sends over 20 "snaps" per day. Snap lost $443.1 million this past quarter. Fortunately, Snap’s advertising revenue increased 153% to $181.7 million last quarter from $71.8 million in the same period a year earlier. BusinessInsider reported recently that Snapchat will soon be adding goal-based bidding for app install ads and smarter targeting for advertisers to reach users that have previously interacted with its other ads. In the future, we fully expect to see social companies being a first mover and a fast follower in parallel. Incorporating learnings from the competitive space and translating it within a specific app or company will be critical. And embedding external features in a unique format to enhance a user experience will be the new norm. H/t: Subha Srinivas Townsend for collaborating with me on this article. Townsend is a product lead at Intuit and previously worked at McKinsey & Company. She received her MBA from Harvard Business School and her BA from Stanford..
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