Commentary

Pre-Q2 Forecast: Snap Should Thrive Despite Facebook Attacks, Slumping Stock

Amid reports of unhappy advertisers, merciless competition, and a slumping stock price, Snap watchers have had a field day bashing the young company.

For my part, I recently said Snap was getting desperate.

But, ahead of its quarterly earnings report, some knowledgeable folks are betting on a bright future for the social maverick.

“Snap has vast, long-term potential as it offers an engaging platform for communication and entertainment,” according to Aaron Goldman, CMO of media and data science firm 4C Insights.

The latter point is what positions Snap so well to augment TV ad budgets -- especially those targeting the younger demographic, Goldman says.

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From the first quarter of the year to the second, 4C saw ad spending on Snap increase by 101%.

Critically, Snap still holds considerable sway among its core audience of younger users.

Indeed, only 9% of young millennials would currently call Snapchat a “fad,” according to a recent survey conducted by Fluent.

What’s more, nearly half (48%) of those 18 to 24 say they are still using Snapchat at least once a month, the marketing firm found. That’s on par with both Facebook (49%), and Instagram (46%).

What about Facebook and its relentless efforts to undermine Snap and its product innovation? Well, the social giant has certainly been gunning for Snap, but some analysts say its market dominance is overblown.

In his words, Brian White at Drexel Hamilton doesn’t buy the “never-ending, doomsday narrative around Facebook’s perceived impact on Snapchat.”

As such, the analyst said in a note to investors that he sees “strong upside potential” for Snap and its stock price over the next 12 months.

Going forward, the key metric to watch is time spent with Snap’s flagship Snapchat app, says Goldman.

“The more it can keep people tuned in throughout the day, the more it will become the premier destination for brands looking to break through the multiscreen clutter.”

According to Lauren Wiener, CEO Tremor Video DSP, Snap's success is a sure thing. “Snap has been a pioneer in formatting TV-specific ads for mobile,” she said. “From 3-second to vertical ads, they’re building the future of TV creative -- and as such, they’ll only become more successful as the boundaries between TV and digital video continue to blur.”

Of course, we’ll see who's still standing by Snap's side after its earnings announcement, Thursday night.

1 comment about "Pre-Q2 Forecast: Snap Should Thrive Despite Facebook Attacks, Slumping Stock".
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  1. PJ Lehrer from NYU, August 10, 2017 at 1:56 p.m.

    So now both Twitter and Snap are trying to sell themselves as an augment to tv.  What if you can't afford tv?  And I have to wonder about the usage data, since it is so inconsistent with what my students have to say.  More here...
    http://pjlehrer.blogspot.com/2017/03/so-after-you-used-snapchat-to-wear-pair.html

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