headquarters of Snapchat

Snapchat Predicted To Go Public With IPO In 2016 And Take On Twitter

On average, more than 100 million people log into Snapchat and send 400 million snaps each day. That works out as 9,000 snaps per second, more than the number of posts published on Facebook and Instagram combined. The company’s revenue for 2015 is expected to hit $100 million, and triple in 2016. With such impressive growth, analysts, such as editor and founder of The Information, Jessica Lessin, are predicting a Snapchat IPO over the coming year.

“If the business growth keeps up, I don’t think Snapchat will be as quick to dismiss being public as its peers. When weighing the benefits of liquidity against the hassles of being public, I think Evan Spiegel (Snapchat CEO) will jump much sooner than others.”

Earlier this week, Snapchat launched a music channel on its Discover platform, marking a move into creating original content live. Sponsored exclusively by Spotify, the channel debuted pieces of music-themed content, with original articles, artist interviews, videos of live performances, and multimedia celebrating the best moments in music from 2015. The channel is expected to continue into early 2016, each day focusing on a different genre of modern music.

Such momentum led MEC Global’s Noah Mallin to single out Snapchat as one to watch in 2016, even citing the company’s ascent as a major threat to Twitter. MEC Global is a buyer of ads on social media and works for clients including Marriott, GoDaddy, and Renault, and Mallin praised Snapchat’s unique potential as an advertising vehicle.

Snapchat began selling ads in October, 2014, and when Business Insider surveyed opinion on Snapchat from the advertising community in July, many were dissatisfied. Demand for ad space outweighed what Snapchat’s team could supply, and criticisms were aimed at the app’s lack of analytics data on the effectiveness of ads.

Compared to Facebook, Google, or Twitter, Snapchat is still behind in this respect, but has made significant improvements to its measurements. Snapchat has opened up more targeting options, which allows advertisers to target ads at specific age groups and by device, location, and context.

Evan Spiegel
Bloomberg LP Founder Michael Bloomberg, Snapchat Co-Founder and CEO Evan Spiegel, and Yahoo News Global Anchor Katie Couric, speak onstage during ‘Disrupting Information and Communication’ at the Vanity Fair New Establishment Summit. [Photo by Kimberly White/Getty Images for Vanity Fair]
Snapchat has rolled out new ad formats, including sponsored lenses that let users overlay graphics and animations over selfies, and a native video ad product called 3V, which stands for Vertical, Video, Views.

Snapchat also offers some clear and unique advantages over social media rivals when it comes to advertising. According to some estimates, as little as 8 percent of ads actually reach a human pair of eyes, with Broken ads, bot traffic, banner blindness, and ad blocker usage all contributing factors. Snapchat bypasses many of these problems, as co-founder of NeoReach Misha Talavera explains.

“Snapchat is mobile-only, and people tend to be more focused on the smaller screens because they don’t get distracted by pop-ups and other tabs… when a user opens a snap, the snap takes up the whole screen, increasing consumer engagement.” And Snapchat also offers the opportunity for more intimate and immersive content — followers only see you in a snap, and this can make “followers feel like you are talking to them personally, rather than making a public announcement.”

It is this intimacy, combined with Snapchat’s video product which is giving the advertising industry something to be excited about. According to Mallin, MEC Global’s clients’ spending on Facebook had increased 55 percent between Q4 2014 and Q4 2015, an acceleration that had been boosted largely by advertisers’ demand for video ads.

“It’s Snapchat’s video story that is getting marketers excited. One of the things driving it is the rising video as a vehicle for clients. When looking at digital video, really Facebook and YouTube are top of the pack. that’s where we’re seeing a lot of the money going.”

Twitter has been moving towards video, with its standalone live streaming app, Periscope, six-second-video app, Vine, and its Moments tab — highlights of the day’s news, trending topics, and Promoted Moment ads. But despite this, Mallin believes that Twitter hasn’t built a compelling story around video, and that’s where the danger lies.

“I don’t necessarily see them (Snapchat) taking pieces of the pie away from Facebook or YouTube, but I do think it makes it a harder story for Twitter to tell about video. Twitter, there’s still growth happening there for sure. But video as a product, although they’ve been working very hard to revamp, amplify, and to add options there, it’s still not where Facebook or YouTube are.”

It is precisely this lag, Twitter falling behind its larger rivals on the video front, that could play to Snapchat’s advantage in 2016.

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[Photo by Kevork Djansezian/Getty Images]

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