Snap Inc., the company behind the social media platform Snapchat, continues to struggle in its quest to create the same kind of customer loyalty and brand identity that Facebook and Google have been able to secure. It has released its financial results during the second quarter of 2018, reporting, among other things, a two percent decrease in daily users compared to the first quarter. It also reported a net loss of $353 million, which is better than its Q2 2017 loss of $443 million, but still, losses of any kind aren’t what the company wants to see.
Because Facebook and Twitter have also reported slowed growth, questions about the saturation point of the social media industry have arisen. Regardless, Evan Spiegel, CEO and co-founder of Snap, remains optimistic. “We are excited by the progress we have been making and by the opportunities ahead as we continue to invest in innovation,” he says.
While the net losses and the decrease in daily users don’t seem particularly encouraging, the Q2 results aren’t all bad. The company’s average revenue per user increased by 34 percent compared to the same quarter last year, and the audience of 11 of the company’s shows increased by 3 million. Furthermore, the company released several new features, such as Snap Kits and an upgrade to Spectacles, which it hopes will improve growth.
Furthermore, the company has now made Snap Pixel, which helps advertisers measure the cross-device impact of their campaigns, available to all advertisers regardless of size. Since the beta launch in Q4 of 2017, Snap Pixel has measured over 100 million purchase events, 70 million of which occurred in Q2 2018.
Bryta Schulz, Vice President of Marketing at Janrain, weighs in on the issue. “Keeping the Pareto effect, also known as the 80/20 rule, in mind and understanding that roughly 20 percent of your customers will drive 80 percent of your revenue sheds an interesting light on the newly introduced Snap Pixel. Their revenue per user is going up, but how will they respond to the privacy and consent requirements that are surfacing?”
Schulz continues, “The recent passing of the California Consumer Privacy Act of 2018, close on the heels of GDPR, requires the right to opt out of allowing an organization to sell personal information to third parties. And what about consumers who are under 16 years old? How will they comply with the right not to have their personal information sold absent their, or their parent’s, opt-in?”
These factors definitely warrant consideration, but at least the company has a new investor, Prince al-Waleed bin Talal of Saudia Arabia, considered one of the richest men in the world. He purchased 2.3 percent of the company’s shares after the market closed on August 6th, valued at around $250 million. He says, “Snapchat is one of the most innovative social media platforms in the world and we believe it has only just begun to scratch the surface of its true potential and we are blessed to be part of it.”