Though Snapchat began as a simple app for sending disappearing images, the popular social media platform has evolved substantially over the past seven years. Since its launch in 2011, Snapchat has added a plethora of notable features in an effort to improve and monetize the service, namely Stories, Chat, and Snapchat Discover.
Despite its efforts to stay relevant, Snapchat has undeniably struggled to keep up with its competitors. In 2016, Instagram hijacked its Stories feature, drawing influencers and users alike away from Snapchat. Snapchat has also struggled to successfully integrate advertising measures, generating 6x less revenue per user than Facebook in Q3 2017.
Many have speculated that Snapchat may be dying. However, its Q4 2017 results indicate that the app still has a heartbeat. Here we’ll breakdown Snap Inc.’s recent earnings release, unpack its plan to win back users with a redesign, and examine its potential comeback in the context of influencer marketing.
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Snap Inc. held its Q4 2017 earnings call on February 6, 2018, and shocked many with its impressive user and revenue growth. Snapchat exceeded analysts’ Q4 2017 revenue expectations and beat single quarter user growth for the first time in over a year.
In the hours following the earnings call, Snap Inc.’s stock jumped close to 27% and settled at gains around 22%. See the most notable statistics from the earnings call below:
Snapchat added 8.9 million DAUs (5% growth) during the last quarter of the year, for a total of 187 million DAUs.
DAUs increased by a total of 28.8 million, or 18%, in 2017.
Snap Inc.’s revenue for Q4 2017 was $285.7 million, compared to $165.6 million in revenue during Q4 2016.
Snap Inc.’s revenue grew by 72% year-over-year and 37% quarter-over-quarter.
Average revenue per Snapchat user was $1.53 during Q4 2017, up 5% year-over-year and down 14% quarter-over-quarter.
So what did Snapchat do in 2017 to make for such an impressive fourth quarter? A number of different factors may have played a role.
1. Snapchat improves Snapchat for Androids
Snap Inc. founder and CEO Evan Spiegel has said that improvements to Snapchat’s Android app, “…boosted retention by nearly 20 percent compared to a year ago.” Snapchat’s push to improve the Snapchat experience on Android may have contributed to its favorable Q4 results by helping it capture a larger share of the enormous market for Android devices. Nearly 380 million Android phones were sold in Q1 2017 alone.
2. Snap Inc. hires fewer employees in Q4 2017
According to a recent article, Snap Inc. added only 100 employees during Q4 2017, cutting its hiring rate to one-third that of recent quarters. Snap’s maturation as a company and sustained focus on its core operations may have helped Snapchat save time and money allowing it to scale back on hiring and focus on adding users and generating revenue.
3. Major publishers are added to Snapchat Discover in 2017
When Discover launched in early 2015, Snapchat started by partnering with 11 main publishers among the likes of CNN and People Magazine. In March 2017, the company added partnerships with several major television networks, including NBC, ABC, and A+E Networks.
Snapchat Discover now features 40 prominent publishers, offering a wide variety of engaging entertainment and news content. The addition of new publishing partners in 2017 may have played a role Snapchat’s Q4 growth and success.
Related Post: Who Are Snapchat Discover’s Publishing Partners?
4. Snapchat redesign
In November 2017, Snapchat announced a major redesign that effectively separates user-created content from publisher-created content within the app. In the redesigned app, a camera screen still appears on the homepage. However, Stories and direct messages from friends are now located on the left screen of the app, while Stories and videos published by brands are now housed on the right side of the app.
Though many users have expressed negative opinions about the app’s new appearance and functionality, it’s possible that the changes contributed to Snapchat’s favorable Q4 results.
The majority of U.S. users seem to have received the Snapchat redesign the weekend of February 9, 2018. Due to the timing of its implementation, it’s unclear how heavily the redesign impacted Snapchat’s Q4 2017 results.
However, one thing is quite evident: in the wake of the widespread implementation of the redesign, Snapchat has experienced extreme backlash from users. Currently, 83% of app store reviews (1,941) addressing the update are poor, with one to two stars. A change.org petition demanding the company remove the update has also received more than one million signatures.
One of the major complaints against the platform’s redesign is that Snapchat Stories are no longer sorted in reverse chronological order and are now mixed in with direct messages and individual Snaps, making the app difficult to navigate. Additionally, many users disapprove of the new Story preview feature, which prevents users from auto-advancing user Stories.
The immediate reactions to the app’s redesign have undeniably put a damper on the company’s Q4 success. Some users have threatened to trade Snapchat for Instagram Stories permanently, but Snapchat is standing by its decision to keep the redesign.
It’s important to note that social media users have previously been resistant to updates. In 2008 Facebook drastically changed its design, much to the dismay of users. Facebook’s user base reacted extremely negatively at first but eventually became accustomed to the update. Only time will tell whether or not users will adapt to Snapchat’s redesign.
Snapchat’s impressive Q4 2017 earnings report illustrates that the platform’s plan to win back users is working. However, it remains to be seen whether its major design overhaul will draw in even more users or detract from its 2017 success.
Regardless, Snapchat’s unexpectedly positive Q4 results spell good news for influencer marketing. If Snapchat continues to grow it could reclaim a bigger piece of the influencer marketing industry and subsequently fuel the growth of influencer marketing as content from top social media influencers and sponsored influencer posts return back to the platform.
Undoubtedly, influencers will be an integral part of the app’s plan to win back users and generate ad revenue. In our next post, we’ll explore how Snapchat is specifically looking to win back influencers in 2018.