United States: Building A Successful Social Media App: Four Lessons Learned From Snapchat

Last Updated: November 18 2015
Article by Aaron P. Rubin

Since its launch in 2011, the social media platform Snapchat has generated its share of negative press, with most of that press in some way related to the very characteristic that, at least initially, helped Snapchat to become popular among its mostly youthful user base: its "disappearing" messages feature.

Yet, despite reports that the app began as (and continues to be) a popular sexting tool, that Snapchat's less-than-ironclad security measures resulted in the posting of millions of the app's users' personal information, and that Snapchat inaccurately represented its privacy and security policies, Snapchat was the fastest growing app in 2014 and is the third-most-popular social app among millennials.

So what accounts for Snapchat's $19 billion valuation? According to senior Fortune editor Andrew Nusca, the social media company has employed a "well worn" business model: "marshal a captivated audience, sell advertisements against it, profit."

Since that sounds a lot easier said than done—especially in light of Snapchat's public missteps—we attempted to discern exactly how the company has managed to achieve those milestones. What has it done right?

There is, of course, no exact formula for success; surely the rearing of all unicorns involves some measure of magic pixie dust. But a close examination of Snapchat reveals certain strategies that tech entrepreneurs seeking to duplicate Snapchat's success might wish to emulate.

1. Identify and pioneer a highly desirable feature.

Because they encourage spontaneity and reassure social network users that they're not sacrificing long-term privacy, disappearing messaging apps have been popping up everywhere over the last couple of years. But Snapchat was one of the very first social media companies to recognize the appeal of ephemeral posts—the app was premised on the claim that photos and texts sent using Snapchat disappeared after 10 seconds—and being first never hurts, especially when it comes to attracting an audience.

In the last couple of years, however, doubts have arisen regarding Snapchat's "disappearing messages" claims. Most notably, a 2014 Federal Trade Commission investigation concluded that, because several work-arounds exist, the company's statements about its messages being ephemeral are essentially false.

Surprisingly, use of the Snapchat app continued to increase even as the scandal broke, perhaps because, by then, Snapchat had already become popular with teenagers, or because the company had already implemented even more "addictive" features (see numbers 2 and 3, below).

Nevertheless, Snapchat has since toned down its description of the app in the iTunes store—the description now clarifies that Snaps disappear "unless [the recipients of the Snaps] take a screenshot"—and the company is also taking steps to beef up security and convince users that it's worthy of their trust.

2. Improve on a feature that has already proven popular with social media users.

Snapchat's reputation as the first "disappearing message" app may have been responsible for marshalling its young audience, but the social media company's innovative online video features are likely the reason that audience has stuck around.

As a medium that allows people to easily "satisfy their information and entertainment needs," online video is one of social media users' favorite features, industry experts agree. But the video functionality of many social media platforms has left a lot to be desired, according to some social media enthusiasts. Until now.

In his own video explaining Snapchat's popularity, YouTube personality Casey Neistat explains what online video fans have always wanted most from social media platforms: "It's never been about just sharing a moving image," Neistat explains. "It's about giving people an easy way to tell a story."

With the introduction of Snapchat Stories, a feature that allows users to stitch several photos and quick videos together throughout their day to create a narrative, Snapchat "became the first company to figure out video on mobile," according to Neistat.

Snapchat Stories also have an authentic, unedited quality that the platform's young users really appreciate. "You can't, like, lie," one of the Snapchat fans in Neistat's video explains, "It's in the moment."

"Snapchat is about now, not about photos with pretty filters or perfectly edited videos," Neistat said. "It's about sharing stories of your life with people who are interested."

3. Create compelling content by leveraging human resources.

Recognizing that even the most sophisticated algorithms have limitations, many tech companies are starting to rely on human curators for their content, writes Time tech reporter Victor Lukerson, and Snapchat is no exception. Snapchat Live Stories, a feature Lukerson describes as the app's "most addictive feature," uses teams of actual people to choose from among as many as 20,000 user content submissions for each story. The curators create montages with narrative arcs by stitching together the best of the users' photos and short video submissions.

Based on the numbers—Live Stories reportedly attract 20 million viewers in a 24-hour window—Snapchat's use of human curators is clearly paying off.

 4. Give brands a unique and attractive way to advertise.

With privacy concerns at an all-time high, social media users may become less inclined to patronize sites that use personal data to serve targeted ads, predicts Forbes contributor Jayson DeMers.

That works for Snapchat. In contrast to most of the top social media platforms, Snapchat "has very little information about its users," Time's Lukerson reports. And Evan Spiegel, Snapchat's CEO, has said that he doesn't want to populate his platform with "creepy" hyper-targeted ads.

Snapchat's abstention from user-info aggregation may or may not prove important to its youthful user base; the nearly 100 million daily users who continue to log in despite reports about the holes in the platform's "disappearing messages" claim apparently don't place as much of a premium on privacy as everyone originally thought.

The important part is that Snapchat has hit on another—potentially more lucrative—way to monetize its business. According to Lukerson, the company "is pitching advertisers the same way TV executives do: by touting the massive audience that can view a single piece of media at the same time."

Advertisers love content that's live, and Snapchat's Live Stories are exactly that. Snapchat's presentation of its live content in a linear feed makes it very much like live event feeds on television, a medium that Snapchat's coveted demographic is slowly but surely abandoning.

Advertising on the platform is still risky. After just three seconds, 60% to 70% of Snapchat's users stopped watching ads on the app. For that reason, some industry observers assert that Snapchat advertising is still probably best left to big brands with big advertising budgets.

And a big budget they'll need. Snapchat has been tight-lipped about exactly what it's charging, but, according to sources familiar with the business, the platform is selling $400,000 worth of ad space for a story generating 20 million views.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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