Splitting friends from professional publishers has been good to Snapchat, according to a new interview with founder and CEO Evan Spiegel, as the widely-criticised move is now bearing some fruit; the company has reflected on the pressures of the quarterly report and how unpopular strategic decisions need time to mature.
This is according to comments made to the Wall Street Journal by the 29-year-old chief executive, who said in an interview that “time spent watching premium content grew 40% year over year,” as did the overall audience for this content. It just took some getting used to.
His comments echo the company’s relatively healthy growth of Q3 2019, in which it grew users, revenues, use of stories and discover content. Though Snap still makes a loss, in part due to the cost of growth compared to average revenue per user, its fans are using it more with an average open rate of 30 times a day, up from 25 times a day just over a year before. It wasn’t looking like this last year.
In the short term, the redesign of Snap’s flagship Snapchat app last year sent the company’s share price tumbling and rendered its users apathetic, including a cadre of influencers, among them Kylie Jenner who asked her followers if any of them do not open Snapchat anymore. “Ugh this is so sad,” she said.
It really was sad. Some of the new features, including a maps feature and a more prominent ‘Discover’ section, designed to host popular and premium publisher content, were proving to be pretty thin on users. Internal data leaked in January suggested that both were significantly underperforming – maps was being used by just 11% and Discover was drawing in just 21%. That same data, however, showed that core functionality use remained strong.
Since then, the firm has been tweaking and improving the offer both on the front and back end. CEO Evan Spiegel suggest that now “you’re seeing a lot of investments we made – some of which were quite controversial – start paying off.” Among them were self-explanatory but expensive transitions that would yield bigger long-term margins, such as Snap’s release of a self-serve ad platform that Spiegel claims to have “brought advertising pricing down 90%.”
It has been a steep learning curve for the company since its initial public offering in March of 2017, not only because of continued operating losses, but because of the predictability that investors expect. Unlike when Snap was private, and it was able to make big changes swiftly, Spiegel now recognises that drastic change “can actually harm the business in a way that makes it harder going forward.”
Since then, other operating expenses have cost the company – such as a new version of its Android app aimed at users in developing markets – but that are pitched at long-term growth. However, profitability is still a good way off, and without that it’s down to how long investors are willing to wait.
Sourced from the Wall Street Journal, WARC, TechCrunch