I am always on my phone. My friends hate it. My family hates. I hate it. I can’t put my phone down, and the two apps I spend the most time on are Snapchat and Instagram.
We live in a mobile age and whether we like it or not, we’re becoming much more attached to our phones. The businesses that will dominate in the future will eventually become mobile only, not mobile first. Facebook is doing great things with mobile. So is Tinder. But Snapchat and Instagram are starting to distance themselves from the pack.
In December 2014, Citigroup estimated Instagram to be worth $35 billion. That’s just a few short years after Facebook acquired Instagram for $1 billion. What once seemed like an outrageous amount to pay for a mobile app with no revenue, now seems like a steal.
Around the same time, Snapchat raised $485 million of venture capital at an estimated valuation of $20 billion. That’s nearly seven times the amount Snapchat turned down from Facebook just a year earlier. It’s not just an app for sexting, as so many foolishly label it. It’s the real deal.
To put in perspective how far ahead of the pack these two are, the aforementioned Tinder is valued around $750 million.
I wrote shortly after Snapchat turned down Facebook that I was bullish on Snapchat. Fifteen months later, I still am. The reason being, I think Snapchat cracked mobile engagement between brands and users.
Just last month I wrote a post, reaffirming my belief that Snapchat is a growing juggernaut. In the post, I outlined three things I think Snapchat is doing well, Stories, Sponsored Stories, and Live Events. And since my post, Snapchat has launched Discover, a feature that allows users to “discover” video and written content from major brands (like CNN, ESPN, Comedy Central). Together, these features are adding up to be a powerful way for brands to connect with users.
The reason I think Snapchat will be more valuable than Instagram is the same reason why I think Snapchat has figured out mobile engagement. Snapchat is inherently interactive, while Instagram is still a holdover of the disruptive advertising model. That’s why Snapchat’s ads, no matter how expensive they are, will ultimately be more valuable than Instagram’s sponsored posts.
In order to view a snap, even from a friend, you have to voluntarily click the message and continue to hold down your finger. Truthfully, that’s asking a lot of a user. But, if the user does follow through with this action, the information gleaned from the message is much more effective (I don’t have facts to back that up, poke holes as you wish). Instagram still uses the old fashion model of inserting an ad into your organic stream of content. You have no choice but to see it. But you don’t have to pay close attention to it and can quickly scroll past it. Which ad unit do you think is more effective?
Discover is a feature that has huge monetization potential behind it. Discover can be what Pages was to Facebook. It will be a reason for brands and marketers to leave Twitter and leverage Snapchat. Think about the possibilities if Snapchat allowed any brand to open a Discover account and produce editorial content on a daily basis? What if they charged brands for the right to do so? Unlike Facebook and Twitter that shove ads down your throat via the timeline, users can choose to watch a brand’s content…on-the-go, the way they like to consume content.
I can definitely see a world where people open up Snapchat first thing in the morning. They can check their friend’s snaps (because personal stories are becoming the new status update). Then they can head over and read the daily headlines from their favorite publications. Snapchat gives the users the power to choose, something no other mobile app does right now (if you can think of an example, let me know).
Brands are starting to see the value. Take the movie Pitch Perfect 2. At the end of their trailers, they’re starting to push Facebook AND Snapchat. Not Twitter. I followed the account and they’re doing really creative things to engage users before the movie comes out. Whether it’s exclusive content, crowdsourced snaps, or fun and personal snaps like your friend would send you, they’re all effective.
In 2013 I predicted Snapchat would be acquired for ~$10 billion. I was wrong about that, but I wasn’t wrong to be bullish on the app. Since I’m a glutton for punishment, I’ll make another prediction. I think Snapchat will eventually go public and its opening market value will be $100 billion. If you want to keep up with me on Snapchat, my username is JessePaul.