Inside Snap’s Attempt to Boost Engagement
Earnings, revenue, and subscribers come short
In 2Q17, Snap generated revenue of $181.7 million, up sharply from a year earlier but short of the $186 million that analysts expected. It posted net EPS (earnings per share) of -$0.16, larger than the EPS of $0.14 that analysts expected. Snap concluded the quarter with 173 million daily active users, compared with analysts’ expectation of 175.2 million daily users. Snap stock fell in the wake of these disappointing results.
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Snap’s introduction of the Paperclip feature is likely to bolster its fortunes. Paperclip enables Snapchat users to add external links to their posts, something that wasn’t possible before.
This feature could reward Snap in a number ways. Since Paperclip provides an extra way for people to interact on Snapchat, it can improve user engagement, draw more people to the platform, and open up monetization opportunities for Snapchat users—especially influencers.
Influencers are important for social media companies
Social media influencers have largely kept off Snapchat, partly because of limited tools to measure their impact or monetize their audience on the platform. Paperclip could get more influencers interested in Snapchat, helping the app grow its audience and improve platform engagement at a faster pace.
When it comes to social media advertising, marketers put a premium on audience size and user engagement, which explains why Facebook (FB) and Alphabet’s (GOOGL) Google are top-priority advertising platforms for many marketers. Snap, which also competes with Twitter (TWTR) and Yelp (YELP), needs to find ways to encourage marketers to spend more on Snapchat ads.