Feedback Loup: Snapchat

We think customer feedback is a critical (but too often overlooked) component of understanding where technology stands today and where it’s headed in the future. Our Feedback Loup series provides real customer feedback on the technologies shaping our future. Snap’s IPO is a perfect opportunity to step back and gather comments from Snapchat users on their habits and practices from frequency to filters.

Snap’s public offering is great for the tech industry and is a huge accomplishment for the company. We summarized our thoughts in an open letter to the company, touching on managing expectations while chasing a bold long-term vision. We’re big fans of the direction they are heading with their core AR capabilities and budding hardware lineup. We recently argued that Snap is an augmented reality powerhouse because Snap combines market-leading AR technology with dedicated cameras, like Spectacles, to deliver an unmatched user experience.

But we wanted to bring the Snap story to life, gather some real user feedback and, for novices, show you why people love using Snapchat. So we asked 32 college students – a small “buzz” survey within a core demographic – about how they use Snapchat. Here’s some of what we heard:

Key Data Points from our Buzz Survey of College Students:

  • 66% snap more today than they did 6 months ago
  • The average user snaps 37.8 times per day
  • 69% send more than 5 snaps per day
  • 41% could recall a specific ad they saw on Snapchat

We know Snapchat’s global user base is growing rapidly. Our data suggests that college Snapchat users are also using the service more often. 66% of the students we spoke with said they snap more now than they did 6 months ago, 28% snap less frequently today, and 6% snap roughly the same amount.

Among the 32 students in our sample, the average user snaps 37.8 per day. 69% send more than 5 snaps per day and 19% send more than 75 snaps per day. One user told us that she sends about 200 snaps per day. Interestingly, the median number of snaps per day was 17.5, so it’s easy to see the 80/20 rule in effect.  Based on our results, 80% of the snaps in our buzz survey were sent by 30% of the users we surveyed.

We also asked each user to pick a favorite Snapchat filter. The most popular option is to send a snap without a filter; 25% of users prefer no filter. The most popular filter is the dog filter (13%) followed by the face swap filter (9%).

Snap weaves sponsored content, filters, and ads into the Snapchat experience in an engaging way that sometimes goes unnoticed by users. It’s hard to use Snapchat without exposure to content that generates revenue for the company. While the seamless integration of sponsored content is clearly an objective for Snap, ad recall rates are also important for brands. Our survey found that 41% of users could recall a specific ad they say on Snapchat.

Notably, about two-thirds of those who could not recall a specific ad remember seeing ads more generally. But that implies that about 20% of all users in our sample do not even realize that Snapchat serves ads to its users.

Snapchat has the ability to generate advertising revenue by charging brands to post stories to its “Discover” page, and also by selling advertisements in three forms: Sponsored Ads, Geofilters, and Lenses.

  1. Sponsored Ads are full screen advertisements that users see in Snapchat. These ads can be seen in two places. First, the “Discover” stories that companies manage. On “Discover” stories, brands such as CNN, WSJ, Comedy Central, ESPN, National Geographic, or iHeartRadio can post pictures about their articles. Users can then swipe up to be directed to the article on the sponsor’s website. Companies on the “Discover” page can sell advertisements to other brands or allow Snapchat to sell advertisements to brands on their behalf. In both instances, Snapchat and the “Discover” brand will share the revenue. Second, sponsored ads can also be seen by a user in between their friends’ stories.
  2. Sponsored Geofilters are overlays that place an outline over a picture or video. These overlays allow brands to create a filter that users can add to the photos they share with their friends. Among our respondents that could recall a specific advertisement, 40% recalled a “Sponsored Geofilter” of an upcoming movie.
  3. Sponsored Lenses are similar to filters, but allow the manipulation of a photo or video before it is taken. Brands are able to create their own lenses that include their logo, with the intention that users will select their lens and send it out to their friends.

Now that Snap is publicly traded, there will be even more scrutiny on how its users are engaging with the platform, including user growth, time spent, and ad revenue.  Snapchat has established a unique ad experience within its platform as demonstrated by the 5x y/y growth rate in revenue in Q4 2016.  The company has established a deeply engaged user base generating a solid foundation in ad revenue with interesting optionality in camera hardware.  It will be fun to see how these assets converge even more in the future.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.