Ghost in the Machine

Snapchat Seems Confused About Its Mission

The messaging service can't seem to decide whether to cater to avid users or appeal to a broader audience.
Photographer: Michael Nagle/Bloomberg
SNAP INC - A
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At Closing, April 20st
15.20 USD
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166.28 USD

Not for the first time, Snapchat doesn't seem crystal clear about its goals. 

Earlier this month, parent company Snap Inc. posted its third clunker of an earnings report since it went public in March and surprised investors by announcing that it would overhaul its app. The stated goal was to make the company's app easier to use and therefore appealing to more people.

This was a reversal for the company. Snapchat had long said it wanted to be a welcoming place for people to chat with real friends and share their activities in video diaries.

True connection was important to Snapchat and less so drawing the billions of people who use Facebook or YouTube. This philosophy of intimacy supported an app that seemed like an awkwardly designed mess for novices but was a comforting home for many loyalists.   

Growth Challenged

Snapchat is trying to boost the number of people using its app. Investors have been disappointed by the rate of new Snapchat users.

Source: Snapchat

Suddenly, though, Snapchat seemed to change its mind and set out to tackle the complaint that the app was too difficult for non-diehards. That was three weeks ago. Snapchat might have lost track of its goal or how to communicate what it's trying to achieve.

One of the big changes outlined on Wednesday is the creation of a single hub within Snapchat's app for people to see all their friends' messages and daily video diaries called Stories. Until now, chats with friends have been in one place in the app and their video diaries in another, mixed with Stories from media companies, celebrities and others.

Second, rather than those chats and video diaries organized chronologically, computers will now push the dispatches from people's closest connections up higher. 

In principle, both those changes seem useful. People who use Snapchat avidly to communicate with their friends now won't have to bounce around in the app to see what their buddies are doing. 

Look Out Below

Snapchat shares are trading 20% below the company's IPO price

Source: Bloomberg

Here's the rub, though. The changes Snapchat described potentially make the app more appealing to people who already use Snapchat regularly. I'm not sure it does much to make Snapchat alluring to people who don't use it or find it intimidating to try. And that was exactly what Snapchat said it wanted to do. Snapchat said a big goal for 2018 was increasing the number of users. It's not clear the company has tackled the biggest barriers for Snapchat newcomers. 

Worse, Snapchat doesn't try to explain how this app redesign will make Snapchat easier to use for more people. Or rather, it explains its strategy in a rather disingenuous way.

CEO Evan Spiegel talked in an opinion piece on Wednesday about the damaging effects of digital hangouts -- Facebook, although he doesn't name the company -- that prioritize information feeds based on the predilections of friends and contacts. Fair point. We've seen from the garbage fires of Facebook and Twitter that social media can be a stifling place and a playground for trolls and misinformation campaigns.

But Spiegel seems to have forgotten that his stated strategy is not to save the world from "filter bubbles" or "fake news" but to make his app more appealing to increase the number of people using Snapchat. Spiegel either lost track of his own mission or is articulating a high-minded goal for what is actually a self-interested strategy change.

Not Good Enough

Snapchat is squeezing more revenue from each of its users, but the growth has been disappointing to investors

Source: Bloomberg

Spiegel also tries to say that his company is doing a big favor to the biggest potential losers from the app redesign: the media and entertainment companies that make videos, news articles and other information on Snapchat.

Many of those companies have devoted millions of dollars to making TV-like shows or articles tailored to Snapchat. Some of their efforts have been inventive ways to deliver information or entertainment in fresh forms, and Snapchat has created an inviting place for those professional purveyors to thrive. 

But those Snapchat partners are likely drawing the short stick now. Snapchat's redesign creates a separate section for professional media and entertainment companies, untethered from communication among friends.

That may be the best thing for Snapchat users, but it also decreases the likelihood that someone will stumble on an ESPN video diary when they're looking for a friend's message. Spiegel says what's bad for Snapchat's media partners is actually good, because ... I'm not exactly clear why. Because this separate entertainment garden will be more personalized, maybe?

A big chunk of Snapchat's revenue also comes from advertisements that appear in this professional media programming. That means the redesign could dent Snapchat's finances, too.  

This mission confusion reinforces the idea that Snapchat isn't the muscular and confident company it seemed to be. Spiegel developed a reputation as visionary who had a clear idea of what he wanted Snapchat to be and communicated his vision effectively. After several stumbles, Spiegel looks like a less sure-footed pitchman for Snapchat or its strategy. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Shira Ovide in New York at sovide@bloomberg.net

    To contact the editor responsible for this story:
    Daniel Niemi at dniemi1@bloomberg.net

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