Snapchat Removes Local Stories, Rumblings of Pending IPO
More than a year ago, during an interview at ReCode's 2015 Code Conference, Snapchat CEO Evan Spiegel said that the company "needed" an IPO:
"An IPO [is] another dot in the growth of our business - we don't view that as the end, it's just the beginning."
At the time, Snapchat was valued $15 billion, but that went up to $20 billion as of the platform's last funding round, a massive price tag, particularly for a company that hasn't yet returned a profit. But profit is on the cards - maybe not yet enough to back-up a $20 billion valuation necessarily, but eMarketer this week predicted that Snapchat will be generating close to $2 billion in ad revenue by 2018.
Given the current state, and the rising challenge from other players (most notably Instagram), maybe now the time is right for Snapchat to make that next, big move. According to The Information, that's exactly what's happening - their sources claim that Snapchat's talking to investment banks about the possibility of an initial public offering either in late 2016 or early 2017.
And while that's significant news on the more "bigger picture" business front, everyday users might just as easily shrug it off. So what? What does it matter to you if Snapchat goes public?
Of course, going public does change things significantly - as noted by Engadget:
"Public companies are under much more pressure to turn a profit, and that means both cutting money-losing features as well as finding more ways to earn some coin (just ask Twitter if you have any doubts). Your favorite feature might vanish, or you could see more ads than you did before."
So while you might not necessarily be in a position to invest in Snapchat, an IPO will still cause some impact - and we may just be seeing the first hints of that with Snapchat announcing today that they're dropping Local Stories.
Local Stories, for those unaware, are Snapchat stories which center on everyday events and happenings shot by users (and posted publicly) within a certain region - you can see the "Los Angeles" local story in the above image. And while more than a third of Snapchat's 150 million daily active users are creating their own Stories, Local Stories haven't proven as popular - as a result, Snapchat will cut around 15 jobs in their New York and Los Angeles offices.
The move is the latest indication that Snapchat's getting serious about its business strategy, introducing new ad options, like behavioral targeting, while cutting costs in order to boost its investor appeal. Of course, it could also just be a bit of housekeeping - Snapchat hasn't released any official stats on Local Stories use - but all the signs seem to point to Snapchat eyeing that next phase of their evolution, and that might also involve them coming out with a big announcement to help ensure the IPO goes off with a bang.
The speculated "next big thing" for Snapchat is, of course, their augmented reality glasses, which could be coming sometime soon based on recent reports.
A possible Snapchat glasses mock-up (made by us)
Snapchat also has a range of other innovative tools and apps they're working on which could boost the platform's appeal, including image-recognition triggered ads and their recent acquisition of computer vision start-up Seene. And while the Seene acquisition hasn't been officially confirmed (Seene's co-founder has, however, changed his LinkedIn profile to reflect that he now works for Snapchat), a message on Seene's website hints at something big in the works.
There's a sense of anticipation for Snapchat's next big move, particularly in response to Instagram Stories, and all signs point to them introducing a whole new element to the app through computer vision. The success of Pokemon GO has acted as something of a barometer for the public's acceptance, and likely adoption, of augmented reality, so, again, the time might be just right for Snapchat to make that next step and evolve to another level.
The benefits of an IPO for marketers will be increased transparency - Snapchat will need to provide more data and analytics options to ensure their ad products are more accountable, and we'll also get more accurate user data and stats to go on, which will likely boost the platform's overall appeal. It'll also mean that Snapchat will be looking to provide more enticing ad options - it'll be a big balancing act to provide new ad tools without hurting the user experience, but they have already started on this path, with ads now inserted between Stories content.
While some see Instagram Stories as the first damaging blow to Snapchat's rapid growth, there's clearly still a lot of potential and a lot of opportunity for the (now slightly less) ephemeral content app. And given the platform's history of innovation and understanding of their audience, it's probably a bit early to be counting out Snapchat just yet.
Those next steps will be worth watching - yes, Facebook and Instagram could slow Snapchat, but there's also every chance that app could become significantly more influential than it is now.
Unlike the app's content, I wouldn't be expecting Spiegel and Co to be disappearing anytime soon.
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