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3 Ways Snapchat Is Responding To Slow User Growth

3 Ways Snapchat Is Responding To Slow User Growth

After several months of poor daily-active-user figures by Snap Inc (NYSE: SNAP), Evan Spiegel, Snapchat CEO and co-founder, is determined to drive user-engagement.

The DAU decline occurred right after Facebook Inc (NASDAQ: FB)'s Instagram Stories launched, and Spiegel has taken notice. Specifically, he highlighted it at the end of the third quarter when he wrote,

    "There are many factors that could negatively affect user retention, growth, and engagement, including if:

  • Users increasingly engage with competing products instead of ours
  • Our competitors may mimic our products and therefore harm our user engagement and growth.”

Since taking the shot at Instagram, Spiegel has been working to increase Snapchat’s user base and its engagement with the app. Just in this past month, he has taken three key measures he feels should help user growth.

The Launch Of Exclusive Snap-Only Shows

At the Q1 earnings call on May 7, Spiegel said: “I think one of the things we're really excited about is our new Shows product. It is content created just for Snap. So rather than a lot of the video content you're seeing I think on mobile right now which is repurposed from TV or repurposed from the Internet, we've worked with some really outstanding partners to create some awesome shows.”

James Corden Partnership

At the time of the call, Snapchat offered about one show a day. The content, which draws over 8 million people per episode, just added a huge name, as “Carpool Karaoke” star and actor James Corden is heading over to Snapchat to do an exclusive show. This move provides Snapchat with a well-known name for their app which should boost ratings.

This deal comes after Snapchat has recently partnered with NBCUniversal (parent company, Comcast Corporation (NASDAQ: CMCSA), Vice, MGM and Walt Disney Co (NYSE: DIS) among other TV producers. It is clear Snapchat is working to capture its huge millennial audience with unique content covering a variety of genres.

Group Stories Implemented To Increase User Growth

Earlier this year, Snapchat said user growth was “relatively flat in the early part of the quarter,” adding, “increased competition was one of the key reasons.”

Thus, the Snapchat team also implemented the new “Group Stories” feature Wednesday. Team Snap stated, “We’re announcing a new way to create custom Stories — about anything, with any of your friends, even for a specific location! It's perfect for a trip, a birthday party, or a new baby story just for the family.”

This move should provide Snapchat with a first-mover advantage that should prevent users from turning to Facebook and Instagram as its go-to picture-sharing platform.

Reaching Beyond The Smartphone

In an effort to gain a competitive advantage, Snapchat is utilizing its partnership with Tagboard to get their app pictured on larger screens. Spiegel believes this move will improve both Snap branding and attract new users.

What To Expect From Tagboard Partnership

This partnership intends on making Snapchat Stories, single Snaps and Snapcodes appear on TVs and billboards at a variety of events. Tagboard helps format and distribute these snaps to their partners.

The partnership is valuable to Snapchat, as it “help[s] Snapchat grow and maintain that audience and helps increase the size of the community," Josh Decker, CEO of Tagboard, told Mashable. The strong results are evident as the New Orleans Pelicans doubled its Snapchat follower base within a month after posting their Snapcode on their stadium screens, according to Mashable.

Decker still sees plenty of opportunity with this partnership as Tagboard has only shared the feature with a small portion of its clients as a form of beta testing.

Snapchat’s Outlook

Spiegel and his team are executing crucial steps which should expand Snapchat’s user base and allow the company to continue to grow at a steady rate.

In light of these announcements, Drexel has reiterated its Buy rating on the stock as, "Over the past couple of months, Snap made important innovation announcements and added new original content that we believe will drive increased user engagement on the Snapchat platform," wrote Drexel analyst, Brian White.

There is a lot to like about Snapchat as they continue to form partnerships that seem to be moving the company in the right direction according to White.

Snapchat was trading up nearly 2.5 percent around the $21.05 level at time of publication.

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Latest Ratings for SNAP

Oct 2019MaintainsNeutral
Oct 2019MaintainsOutperform
Oct 2019MaintainsNeutral

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