Snapchat may have endured a PR nightmare in India a few months ago, but the company’s appeal has not taken a beating among its loyal Indian user base. Arpit Sinha observes how the ephemeral photo sharing platform’s potential in the Indian market.
After its launch in 2011, Snapchat went through an organic expansion across continents, traipsing rather furtively in the Indian digital market. No one can tell exactly when the app was first used in India, but by the end of 2015, Snapchat had already carved a niche for itself.
With a burgeoning growth in daily users, Snapchat soon decided to project itself as a digital marketing behemoth, enabling companies to advertise themselves conveniently through the app. Primarily targeting 18- 30-year-olds, Snapchat currently has an estimated 16 million young users in India, who are the major advertising target for brands such as KFC, Coke, McDonald’s, UCB, etc.
The app, which initially became a rage thanks to its eye-catching picture and video sharing properties, had soon grew by leaps and bounds, touching an overall growth rate of 56%. In India, while it managed to gain traction among just 9% of users, it did show promising signs. It is then that market leader Facebook spread its tentacles to acquire the company.
In 2013, Snap Inc. held its ground and refused to sell off the app to Mark Zuckerberg’s Facebook for $3 billion. As a result, the latter started launching various features in its social forum to eat into Snapchat’s market. In 2016, while Facebook recorded a gross growth of 86%, Snapchat fared poorly with a rise of only 11.7%. Also, while the virtual biggie recorded 286.5x active users, Snapchat only saw around 122x such users in the first quarter.
To intensify the virtual battle, Facebook launched the ‘Camera Effects Platform’. This feature promoted augmented reality (AR) effects, similar to the AR effects, masks and 3D face filters that have always been an integral component of Snapchat’s USP. Eventually, Facebook decided to incorporate these special camera effects into all its core apps – WhatsApp, Instagram, and Messenger.
Snapchat had a penchant for letting users post pictures and videos in a chronological sequence referred to as ‘Stories’. Soon enough, Facebook incorporated a similar feature into Instagram and recently into the WhatsApp status updates. As per Business Insider, only a few people seem to be using Facebook Stories so far. However, the Stories feature in WhatsApp and Instagram kicked off immediately, with the latter currently enjoying a user base of 200 million!
Evan Spiegel, Snapchat’s CEO snapped against such plagiarism by saying, “You have to get comfortable with and enjoy the fact that someone is going to copy you if you make great stuff. At the end of the day, just because Yahoo has a search box, it doesn’t mean they are Google.”
Despite such remarks, imitations continued unabated. If you are an existing user, you’ll probably know that the app has a feature called Geofilters, which allows a user to create location specific filters. Does this sound familiar to the Instagram Geostickers feature?
Present Market Scenario
By making these duplications, Facebook tried to create a ground for mergers and sell-offs. Positioning itself as a market monopoly, the virtual giant aims to be the ultimate ruler of the computer applications clan. Among the top ten applications most widely used in India, as many as four belong to Facebook (Facebook, WhatsApp, Messenger, Instagram). Snapchat does not make it to the list. In such a scenario, what chances does Snapchat have of any survival? Add to it, the recent controversy of calling India a ‘poor’ country to invest did not help the cause.
“Snapchat was executed last year with a treasure chest of self-inflicted blunders, caused by big egos and a lack of strategic focus,” according to Eric Schiffer, CEO of the private equity firm, The Patriarch Organisation, told The Guardian 11. Due to stiff competition from Instagram, Morgan Stanley has been forced to revise its prediction on Snapchat’s stock price from $28 to $16, for 2017.
Chances of Survival
Fortunately for Snapchat, while there was a slight decline in its market popularity within India, the #BoycottSnapchat did not receive too many shares. Youngsters continue to adore the comfort zone provided by the app through its self-deleting message system. As an analyst, Jan Dawson puts it, “What made Snapchat appealing is that it’s raw and unfiltered and people feel very comfortable sharing in a very honest way – something they don’t do with Facebook or Instagram.”
Recently, Snapchat announced its plans for an IPO. This could open a plethora of new opportunities for start-ups. When Facebook went for an IPO in 2012, it was already seven years old and saw a growth of only 25.8x (DAU, 2012). Snapchat is only five and its IPO, in 2017 has already shown a maturity profile of 49.5x.
Snapchat is an ideal promotion medium in any country which has a soaring user base of video content, such as India. Considering its ARPU (Average Revenue per User) growth post the IPO, Snapchat shows promise as a monetization friendly product (KPCB Internet Trends 2016).
Out of all the social media promotions done by companies, only 2-3% of them use Snapchat; this augurs well for young start ups wanting to canoe the sea of digital media. According to the Economic Times, Snapchat has also set an example for all Tech Start-Ups aspiring to launch an IPO.
However, it is interesting to notice that while Snapchat has only 12 million users in India, the country has reportedly become the world’s second largest user of Facebook with a massive 200 million followers. Therefore, it is inexplicably clear that Facebook has a much stronger hold over India, which is the third largest internet market worldwide after China and USA. In such a scenario, how keen will advertisers be, to use the lesser popular app as a promotional springboard for their brands?