Snap Inc IPO: Industry experts weigh in on Snapchat's future

Snap Inc IPO: Marketers weigh in on what the future looks like for the business

Snap's IPO is the biggest tech float in years and while the financial world is abuzz with predictions the move could also have implications for the Snap's advertising business - it's main source of revenue.

Snap's pop opened at $24 a share, but in its IPO filing the company outlined that it can't offer profit in the short-term but can offer growth. So, while Snapchat’s photos might disappear seconds after its 158 million users open them, in order to keep itself afloat the company will need to craft advertising that doesn’t put people off and helps the app stick in their minds a little longer than that.

Its rivals have carved out different paths since going public: Facebook’s stock value has increased by 250% since the opening bell in 2012 while Twitter has lost more than half its value since it floated on the NY exchange in 2013.

Snapchat has indeed grown up, but what will it have to do to make sure it remains profitable while holding on to its chiefly millennial userbase? The Drum caught up with some industry experts to find out what the future holds for the company post-IPO.

Mark Read, global chief executive, Wunderman

"Advertising and marketing efforts on Snapchat are still in their infancy. The platform has followed a familiar task of getting consumer engagement and driving media partnerships, and has built an audience it is now ready to figure out how to monetise.

"Just like Facebook in its early days, there are bound to be some false starts before they work out how to bring brands onto the platform without disrupting the consumer experience. As clients realise they can get to this hard-to-reach audience on Snapchat, interest will grow and the IPO is an important signal that the company has reached maturity and is ready to engage professionally with them.

"While the younger audience is even more fickle, all the evidence points to Snapchat as being the media and social destination of choice. Among the platform’s younger audience is a very influential group of early adopters, and the Camera-first nature of Snapchat makes it a much bigger competitor, particularly against Facebook and Instagram."

Stefan Bardega, chief executive, iProspect UK

"Post IPO is always a critical time because, as you would expect, there is so much new focus on the numbers. But unlike previous big IPOs I think there will be a focus bottom line controls and profitability not just the topline growth, so that it doesn’t take the same trajectory as Twitter which has grown the user base but struggled to reach profit.

"Snapchat will need to therefore balance the opposing forces of investment (in product innovation and acquisitions to stay ahead of Facebook) and cost base management, in a way that previous tech platforms haven’t.

"That is the prevailing commercial wind, but ultimately the audience will decide the fate of Snapchat. If it can innovate at twice the speed of Facebook it will, I am sure, deliver its goals over the next three to five years."

Nicole Yershon, founder, Innovation People

"Snapchat doesn't feel any different from WhatsApp or Instagram etc, it will be seen as just another global ad medium.

"Of course - it isn't the old traditional 'broadcast ad model' but it is the only, new way to communicate, via social and influencers.

"Its fascinating as to how it gets to its [growth] figures - usually based on future advertising revenue - but there have got to be other innovative ways to make this work, be useful and relevant and of course make money - I await that with excitement."

Jerry Daykin, global digital partner at Carat

"While the Spectacles launch was a PR masterclass, the roll out of Snap's IPO has been rather a bumpier ride. Dogged by questions of slow user growth, decreasing engagement, heavy losses and vulnerability to copycat products, it seemed for a moment that its bubble might be about to burst. But as the dust settles on a record-setting IPO, it looks like investors have forgotten those troubles as quickly as a Snap itself vanishes.

"Snap has positioned itself as the Kodak of the 21st century, not a new rival to Facebook, and will look to prove out its vision to reinvent photography and visual communication, rather than try to take on what appears an unwinnable battle for user numbers. Certainly, Snap can go a lot further in monetising its existing user base, but as was seen with Twitter, many of the toughest questions start to come after the IPO buzz has faded.

"With bandwidth and technology challenges slowing down its advance into wider markets, the bet seems to be that Snap can continue to innovate fast enough in its established regions. The company’s success will probably come down to whether we’re still stuck on Snapchat’s quarterly user numbers in five years’ time, or whether it’s managed to truly build out a whole array of services which transform how we capture, share and interpret images."

Marc Curtis, head of labs, TMW Unlimited

"In my view Snapchat seem to be walking a very clever path between understanding what its users want and giving access to brands. It would say that key to its success is its constant reinvention and innovation around their platform.

"Many non-native Snapchat users find the UI baffling, whereas younger users seem comfortable with the chaotic approach to test and learn that Snapchat employ. ​

"The challenge for Snapchat is to not alienate its userbase by slowing down its drive to create new functionality and novel content types. Will it survive after an IPO? In so far as any platform has longevity, yes I think they are here for the medium term at least. If they weren’t doing something right then Facebook wouldn’t be ripping off their ideas as fast as Snapchat comes up with them."

Cathy Boyle, principal analyst, eMarketer

"Time spent will become a more important metric for Snapchat. Because Snapchat generates revenue from advertisers in two different ways - through impression-based ads in Discover and inbetween Stories - its important that time spent within the app increases so that they generate more impressions from users.

"I also think it's important they increase that content consumption time because that's where they'll create revenue from their vertical video units, Snap Ads.

"But at the same time, they will also want to see more people spending time creating content within the platform too, because that's where they generate doallars from sponsored creative tools like Lenses and Geofilters.

"So in both cases, the more time spent on the platform the more revenue for Snapchat."

Pete Blackshaw, head of social and digital, Nestlé

"[Snapchat] is doing a great job, they have a really strong team and have what I would characterise as a 'last movers advantage' in that they’ve been able to look at the success of Facebook and Google and Twitter in terms of the way they have built brand-centric teams and put together research. I would give them credit for moving fast on the successful strategies of other companies.

"That’s good for marketers, we like to jump into relationships with platforms with a very strong learning plan and once we have the confidence that a medium works, pays out and builds the business we are all in.

"Continue to do that and continue to help us decipher the very complicated nature of our kids. I am still trying to figure it out. Facebook can’t ignore it either, it is emulating key aspects of it."

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Rebecca Stewart

Rebecca Stewart is a reporter at The Drum. Based in London, she writes news, analysis and features around brand marketing and digital innovation. She has interviewed key figures from the likes of Airbnb, Amnesty International, Unilever, Facebook and Spotify, as well as covering events in Europe and the US like Ad Week, Dmexco, Dreamforce and Ciclope.

All by Rebecca