Hacking will hurt Snapchat, but will this $10b advertising gamble march it to a digital graveyard?

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Girl looking at mobile phone
PMSL. Thanks for another great advertising experience Snapchat guys. Keep em coming

Whether you use it or not, I reckon you’ve probably heard of Snapchat.

But if you’re one of the few that hasn’t, Snapchat is a social media platform that lets you take photos and short videos, add comments and send them to your network.

It’s different to other social networking because your photo, or snap, disappears after a few seconds.

It does what all good services should do – digital or traditional – it makes your life better.

And you can’t argue against Snapchat’s phenomenal success: 0 to 100m users in just 3 years. Yes you read the right, I said 0 to 100m users in just 3 years.

And according to research over 50% of all US based 18-24 years old use it.

Co-founder and current CEO, Evan Spiegel, just announced the platform is to start running advertising to generate money. After all, when your 3 year old brand is valued at an eye watering $10billion despite not making a penny, you need to start working on your marketing plans.

But here’s where I sniff a couple of problems. Because Spiegel says users, who will need to opt in for advertising, will see “pretty cool” adverts.

The first problem is that the overwhelming majority of users won’t bother opting in. To put it simply, people just do not like be advertised to.

I mean, how often have you heard someone say “If only there were more adverts in this magazine it would make for a better read?” Or “Thank goodness I’ve finally found a website that launches advertising pop-ups every five minutes.”

And how many times have you run to your front door only to be disappointed that you’ve received no direct mail?

You haven’t. And you never will. Most people have one action in mind when it comes to advertising: avoid it.

That’s why platforms like YouTube force you to watch the advertising they carry. Well for around 30 seconds anyway, after which time you can – and very probably do – hit the close X in the top right hand corner.

Another example of this is Sky TVs box sets. You can’t forward the 2 or 3 advertising spots that are played when watching your favourite show. Believe me, I’ve tried!

And people seem to be more keen to avoid advertising on social media. Research shows that people see your marketing messages as an invasion of privacy.

And people are also starting to understand – and resent – that social media platforms know literally everything about them and use it to sell relevant advertising.

The second problem, which is linked to the first, is that adverts are not “pretty cool” as Spiegel says. They are messages created by marketing folk to sell products.

I think it was Claude Hopkins who once said “advertising is salesmen ship in print.” And even though he said that around 100 years ago, I think his opinion is still valid today.

Spiegel has covered himself in this area though by claiming his platform offers an opportunity for companies to brand build.

So the marketing directors and senior advertising agency people who spend money brand building on Snapchat probably won’t analyse their results. There will be little time devoted to looking at sales spikes, content downloads, promotional code redemptions or movements in brand positioning.

I also see a third possible problem, which is probably the biggest facing Snapchat: user defection.

As I’ve already said, you should never underestimate how much people hate being advertised to.

So there is a real danger Snapchat users will simply defect to another advertising free platform for their communications.

After all, Snapchat built a massive user base on the back of millions of people dumping Facebook. So what’s stopping this trend continuing?

One thing that social media platforms have not cracked, but has always been the Holy Grail for brands, is loyalty.

Users of social media platforms haven’t paid a penny. They are not customers. You could view them as free-loaders jumping from one free platform to the next.

So loyalty is nowhere to be seen.

There is one social platform that is trying to develop good old fashion loyalty: WhatsApp.

Their business model, which saw them bought by Facebook for a whopping $19b, is to keep their platform totally advertisement free, instead raising money from subscriptions charged at $0.99 year.

Maybe this model is the future of monetising social media platforms.

Or maybe there is a middle ground is where you can pay for an advertisement free service, or save your money by watching adverts as a penalty.

I think music streaming service Spotify tried this, but eventually gave up and went to charging people a monthly fee.

Jeff Bezo, founder and chief executive officer of Amazon.com, one said “advertising is the price you pay for having an unremarkable product or service.”

So maybe watching advertising is the price you pay for paying nothing for a social media service.

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