Yahoo Finance One way Snapchat can evolve to beat back Instagram
In 2016, Instagram (FB) peered into Snapchat’s playbook, took copious notes and successfully implemented its popular features to its user base of 600 million.
While Snapchat, which rebranded itself to Snap Inc., has focused on becoming a camera company, recently pushing out its first hardware device, Spectacles, Instagram has been steadily encroaching on Snap’s core product—ephemeral messaging.
While Snapchat has more than 150 million daily active users—60 million in the US and Canada alone—Instagram has 300 million users who use the app every day. The app has experienced accelerated growth since the addition of Stories, its blatant copy of Snapchat Stories, a feature that allows users to post videos to a wide range of viewers. The number of Instagram’s net new users per month has increased 50% over the past six months.
Snap’s Spectacles retail for $129. When they first launched, they were so in demand that people sold them on eBay (EBAY) for upwards of $1,000. Though Snap Inc. will double down on Spectacles’ other use cases and other hardware, it can’t lose sight of its main purpose: to be the communication app of choice.
Since launching in August, Instagram Stories has been widely adopted, with 100 million users watching and posting the fleeting videos and photos. In November, Instagram announced that users could send disappearing photos and videos to up to 15 people through Instagram Direct. In response, last month Snapchat rolled out Groups, which lets users hold a group chat with up to 16 people.
Corporate communication
Despite CEO Evan Spiegel’s plans to diversify the company, Snap Inc. will likely always be associated with its first product, Snapchat. So how can the company broaden its core user base? By delving into corporate communication.
Apps like Confide, often referred to as the Snapchat for professionals, have successfully tackled the encrypted messaging space, but Snapchat has the advantage of already having a huge user base.
Jennifer Morgan, the 45-year-old president of the software company SAP’s (SAP) North American division, told Yahoo Finance that she has replaced town hall meetings with two-minute video updates and invites employees to continue the conversation over Snapchat.
For Gen Xers, baby boomers, and even the millennials who aren’t sold on the entertainment value of the app, business communication could unearth a goldmine for Snapchat. Though Morgan’s not part of the app’s core user demographic (60% of users are under 25 years old), the app has gained traction with older generations (parents and grandparents love Facebook, after all). And though the majority of her friend adds came from her employees in their 20s and 30s, older workers have also created accounts to connect with Morgan.
“People who were already on the app added me right away. But others have been creating accounts, like me, now,” she said. “A lot of folks are increasingly curious about Snapchat, especially because they know their kids are on it.”
According to a recent note from investment bank Jefferies, ComScore estimates that 76% of Snapchat’s users are less than 34 years old, and Snapchat has stated that 41% of 18- to 34-year-olds in the US use the app daily.
With so many twenty- and thirty-somethings on the app, Snap can appeal to institutions and business leaders trying to connect with their increasingly younger workforce—millennials as well as Gen Zers who are starting internships and entry-level jobs.
Some companies have started using Snapchat as a hiring tool. JPMorgan (JPM) uses the app to recruit analysts by launching its own geofilters. Goldman Sachs (GS) has scrapped face-to-face interviews on university campuses and introduced video interviewing, which could eventually involve Snapchat. The University of Wisconsin even sent out notifications via Snapchat in addition to traditional acceptance letters.
“They would definitely get a snap before they’d get their mail packet,” said Katelyn Santy, who works in the university’s admissions office. “Students get the snaps pretty immediately because it’s a place where they spend a lot of time.”
SAP’s Morgan told Yahoo Finance that even though she already had an Instagram account, she chose Snapchat as her casual tool to communicate with coworkers.
“I created my Snapchat account specifically to connect with my employees. Snapchat was a foray into a completely different way of communicating, and it’s fun to try new things,” she says. The group messaging feature can be a crucial way for teams of employees to chat both professionally and informally, she says.
As Snap Inc. prepares for its public debut this year, it can add value by unlocking the opportunities in the corporate world.
Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Read more from Melody here & follow her on Twitter @melodyhahm.
