Facebook’s latest moves could have Snapchat on the ropes

Global News Graphics

While the pound-for-pound king of social media is Facebook, there’s also the young up-and-comer, Snapchat. It may not be the biggest, most diverse platform, but still has skills and tricks, like filters and Stories, that have helped it move up the ranks.

“In Snapchat, you have a young, spunky company. A lot has to be proven at this point, but there’s opportunity for investors both ways,” Rick Munarriz, stock analyst at financial website The Motley Fool, told Global News.  

The rise of Snapchat has caught the attention of Facebook, which is firing back at the growing platform. Facebook introduced interactive filters in March, completed their full rollout of Facebook Stories in April and have been playing with disappearing text for the past year.

RELATED: Instagram takes direct aim at Snapchat with new feature called ‘Stories’

“Facebook would not have adopted the technology had it not been a worthwhile advertisement platform. Snapchat is going to be squeezed out,” said Sam Fiorella, author and owner of Sensei Marketing.

Story continues below advertisement

“You can take a look at Vine or other video streaming services that have gone by the wayside. It’s only a matter of time — the writing’s on the wall.”

READ MORE: Twitter’s Vine app shutting down

The gloves are off. Facebook is looking to take what Snapchat has done while knocking them out of the arena.

Can Snapchat go toe-to-toe against Facebook and become a mainstay in the social media landscape, or will Facebook take out Snapchat the same way they KO’ed Vine?

READ MORE: Snapchat introduces new way to save old snaps

Round 1: Advertising

For a social media platform to survive, they need to put ads in front of their audience. Snapchat wasn’t an ad-driven company to start, which helped them attract a young audience. In order to keep that audience without overwhelming them with ads, Snapchat has found unique ways to satisfy advertisers while also not turning its audience away.

“Although you don’t see ads blatantly on it, when you put a filter like a Scooby-Doo collar, the companies behind these trademarks are licensing their stuff to promote their upcoming movies and products,” Munarriz says.    

Story continues below advertisement

Snapchat also allows advertisers to sponsor specific Snapchat Stories. Snapchat has claimed success in several advertisement Stories, including sponsored Stories from Bud Light, Courtyard Marriott and Spotify.

Snapchat has run into problems with advertisers due to its expensive ad rates, skippable ads and lack of targeted advertising techniques.

Facebook has already landed a solid shot against Snapchat’s advertisement plan. According to Digiday, advertisers have started to move away from Snapchat in favour of Instagram Stories, due to their wider audience and connection to Facebook’s ad system.    

“I know when I speak to clients, they and I would be quite nervous to advertise on that platform, because very soon it will all be taken over by Facebook,” Fiorella says.  

Round 2: Demographics

Snapchat does not rival Facebook in any demographic category over 35 years old. Once you begin to look at the young Millennial and Generation Z demographic, Snapchat flexes its muscles.

“If you are marketing to a very young demographic, then Snapchat may be worth considering because it is very popular among [those] under 35 [and] teenagers. That’s their platform. That’s where most young adults are right now,” Fiorella says.
Story continues below advertisement

This is the saving grace for Snapchat. Having a core audience of young adults is attractive for lifetime brands looking to grab unestablished customers. Although Facebook can try to attract this audience by introducing filters and stories, it will be tough to convince teens and young adults to switch platforms.

“Young users don’t want to be on the same social network as their parents, grandparents or teachers. There is something to be said about Snapchat having this strong hold on this young audience,” Munarriz says.

Round 3: Stock market

This is where Snapchat begins to struggle, and where Facebook’s use of Snapchat’s ideas start to affect the company. Snap Inc., Snapchat’s parent company, entered the stock market on March 2, but so far has not had much success. After an initial jump after their first day on the markets, the stock has dropped by roughly 5 points in the past two months (an 18.5 per cent decrease). Snap Inc.’s current stock is priced at $22.59 (U.S.) per share. 

Facebook, meanwhile, went public in May 2012 and currently has a stock price of $150.85 per share.

“Some people believe that Snapchat’s parent company went public too soon,” Munarriz says.    

Snapchat saw a drop in its stock after Facebook and Instagram launched several similar features to Snapchat. This shows that Facebook holds tremendous power over Snapchat, and their ability to entice investors.

Story continues below advertisement

How does Snapchat fare?

“While other companies like Facebook are a true threat, they don’t own the mind share of that younger audience. I would turn Snapchat into a cultural platform for the young generation,” Fiorella says. “That way it’s not about the technology, but about the authenticity. Become a cultural play, as opposed to a technological play.”

Instead of looking to expand its reach to other demographics, Fiorella says Snapchat should focus on keeping the platform as a sacred space for young audiences. Snap Inc.’s hold on the Millennial and Generation Z demographic may be what ultimately helps it successfully duke it out against Facebook.

Sponsored content