Many people say that with Instagram stories, Snapchat is doomed. We shouldn’t be too quick with such assumptions, especially when Snapchat is funded to run until the year 4310 if it wants to, but it is interesting to analyze the move and what it means for both services’ future: My take is that it helps both in building a vertical video advertising market.
When I understood the mechanics of Snapchat (with my third try), I came to the conclusion that the service is here to stay, and to grow further, also beyond “crazy millenials”. I am sticking with that. Instagram’s move to introduce stories will certainly make things harder for Snapchat, but it will not be a question of survival: Snapchat’s biggest issue will be account discovery.
In his Facebook post about Instagram stories, Mark Zuckerberg said that this was the latest step in “putting video at the center of all our services”. This is a clear statement also about the other platforms Facebook is operating, and with stories, vertical video is introduced to them. The UX and the format is a 1:1 copy of Snapchat stories with some additional improvements. And if vertical video advertising – Snapchat plans an advertising API – ever takes off (and I hope it will), Instagram will have a part of this market. But the key rationale, according to most media reactions, seems to be that this should make it harder for Snapchat to grow beyond Millenials and in many markets outside the US.
In my own case – remember this is a study with n=1 – my time spent on Instagram immediately increased, and my time on Snapchat decreased. The reason is that from one day to another, I had more interesting stories in my Instagram than in my Snapchat. That’s because my Instagram is way older, I follow more interesting accounts, and many of those that I follow on Snapchat I have discovered through Instagram. Up to now, I would follow their stories on Snapchat, because the format would be different from Instagram. Now, “both formats” are available to me on one platform.
But I am not the typical Snapchat user. This only concerns the “newsfeed part of Snapchat”, the social network, and not the messenger. I don’t have friends that I regularly chat with on Snapchat (I use Messenger and WhatsApp for this). My network on Snapchat almost entirely consists of accounts that I follow and do not regularly interact with. I discovered them via Facebook, Instagram and online media. The vast majority of Snapchat’s core users comes, as far as I know, from the messenger side, who from there broadcast to a “public” audience on the social network side. For this kind of users that they can get into their service from a messaging perspective, the Instagram move should not have much impact. I would guess this will be the case with a lot of younger target groups, and internationally, there’s still plenty of room for growth for Snapchat (the latest number I have is 150mn daily users). Only a few years back I remember an Instagram representative telling me that “the biggest task right now is to keep the parents out of Instagram”. How things change. Now Instagram keeps the parents from moving to Snapchat.
So the fact that Snapchat is a unique merger of messenger (“left Snapchat”) and social network (“right Snapchat”) makes it less vulnerable to such attacks. Still, to grow beyond millenials, the social network side of it has to grow, and the newsfeed is where the business will be made. Merely a few days after Instagram stories, Snapchat and NBC announced a bold partnership, bringing “The Voice” and “Saturday Night Live” and other top-shows to Snapchat.
This was negotiated way before Instagram launched stories, but it shows the impact Snapchat has at least in the US with their otherwise-hard-to-reach-target-group. And I am sure they will find – or have already found – advertising partners that will make this a success story. But to attract me, a 44 year old who spends most of his online time in social networks, exclusive TV content will only be one thing. The other will be to keep my Snapchat timeline interesting and make me follow more accounts. My Snapchat newsfeed only grows when I myself take the initiative and add accounts. I have to actively search for them or stumble upon the Snapcode somewhere else. And even then, Snapchat wants more from me than just a “fingertip”, I have to scan the code or use their search and am never sure whether I have found the right account. Facebook – and Instagram – always keep suggesting new accounts to follow. The Instagram search and suggestions are great. Only by selecting search you will not get the search window only, but below it a bunch of posts (and since a few weeks: suggested videos) that are intelligently selected by posts and hashtags that you have interacted with in the past. Just try it out… search for hashtag #bmw2002 or something that’s as specific, “heart” some 10 or 20 posts, follow one or two accounts. A day later, just select “search” and see what content they suggest.
Snapchat has none of that. I follow a bunch of football accounts on Snapchat – players and teams. Maybe there are some clubs that have really great content on Snapchat, but there’s no way for me to easily discover that. The best answer Snapchat could have to Instagram’s move is to introduce an intelligent way of discovering relevant accounts – maybe, just a sharing feature of Snaps (that explicitly allow you to share to the rest of the world) would already do the job. Me, who broadcasts to a few friends, I may not want my stories to be shareable to people outside my network. But ask Redbull, adidas or Bayern Munich how they see it. I am sure Snapchat has something in the works that will make account discovery better. That won’t impact those who use Snapchat as a messenger with a built-in social network, but for those who use Snapchat as a social network for vertical video with a built-in messenger, this will be key. And I assume that’s the generation 25-50 that hasn’t been on Snapchat since day one. Or isn’t even on Snapchat yet. Snapchat’s next move in this should be clear: Account discovery will be one key to further growth.
As for Instagram, you have to love stories, but the impact is not clear yet. It will certainly increase time spent. The stories feed that scrolls horizontally may even have the potential to become the primary feed one day. But the photo feed (with increasing amount of video) is highly profitable with Facebook’s self-service ad platform, and monetizing stories might be a bigger challenge than we would initially think. Maybe stories will even cannibalize “photo feed eyeballs” and hurt Instagram in the short term (although “hurt” in relation to Facebook as a whole being able to grow YoY >50% may be a dramatic choice of words). But in order to maintain the growth dynamics and defend against Snapchat, stories will do their job. For those not interested in stories, the service remains more or less the same. For those dicovering vertical video stories for the first time, the reasons to install and spend time on Snapchat will be less convincing.
Is there a competition between Instagram and Snapchat? Yes, there is. Will one try to eat the other alive? Maybe. Will one of them succeed in doing so? I don’t think so. Coming back to Zuckerberg’s view of “putting video in the center of all our services”, Facebook has always understood to build relevance and then, later, monetize it. They will achieve this with stories, too – and this might even help Snapchat on the long run (if they maintain and grow their audience in the meantime, solving among other things the account discovery issue). Vertical video is the big bet behind stories, and no one can deny that this is simply more convenient and more enjoyable than the horizontal 16:9 videos in a device we are holding vertically. With Snapchat AND Instagram, the market may soon reach a size where it makes sense for advertisers to mass-produce vertical advertising. This will help the two of them. In fact, I think others should get into “stories”, too, publishers should produce vertical video, and media agencies should develop formats with vertical video ads. Snapchat and Instagram may be creating a whole new market together – so I see no reason why they can’t co-exist.