Snapchat stock loses $1.3B in value after The Billion Dollar tweet from Kylie Jenner.
The Billion Dollar Tweet from Kylie Jenner makes me wonder whether Snapchat really understands social media or whether they are just selling out to gain widespread adoption so they can generate ad revenue.
It’s just a matter of time before Snapchat abandons its original mission (fun and cool for young kids) as they want to raise their market cap and cash out. And who can blame them as it’s a business and there is precedent for their behavior. For instance, the bulk of Google, Twitter, Instagram, Linkedin and Facebook’s revenue comes from digital advertisements and all of these companies started by establishing a beachhead with a young audience with no disposable income, in order to gain market traction.
The Billion Dollar Tweet – Social Media – The Balance of Power
A fundamental of social media is that he balance of power shifts from companies controlling what is said, when it is said, who says it and to whom it is said on its head. People (influencers, individuals or groups of them) often have as much information as companies and sometimes more (based on knowledge of markets, technology, customers, investors and competitors). And they can share that information at will, globally, 24*7 via multiple social media platforms (images, video, text, audio).
Kylie Jenner, the reality TV star and Queen of Snapchat (25M followers), is not happy about Snapchat’s new redesign and communicated that she is no longer using the app. Seriously, no one at Snapchat (especially product management or product marketing) ever thought to solicit her input before or during the development process?
The Billion Dollar Tweet – Social Media – Go to Market Strategy
Intelligent companies embrace social media and their influencers and users to help them develop, market, sell and support their products.
After Kylie Jenner’s tweet, Snapchats comment to the stock plunge was, “We believe this is an overreaction as Wall Street is hypersensitive to the app redesign. With roughly 25 million followers, [Jenner] carries a loud mouthpiece that speaks to today’s knee jerk reaction in shares”. Really? This certainly seems like the product marketing and product management teams did not embrace Snapchat’s influencers / power users as they conceived of or developed the new interface.
A basic product life cycle marketing principle for product marketing and product management is to:
- Determine a market need based upon a specific use case
- Develop a minimum viable product
- Fix problems based on internal and external feedback until he product is bullet proof
- Evolve the product to make it easier to download, install and use
- Add functionality to the existing offering
- Add new functionality based on internal and external feedback
- Expand in the existing markets
- Develop new products for new markets
A Snapchat representative told ABC News, “Our goal with the recent redesign is to make Snapchat more personal for everyone,” a Snapchat spokesperson told ABC News. “This new foundation is just the beginning and we will always be grateful for any feedback from our community as we roll out new products.” As we roll out new products? That’s like closing the barn door after the horse has left. The community needs to be involved as soon as a development team is assigned to a project – no to mention marketing, sales, support and the rest of the company.
Snapchat’s market adoption includes penetrating innovators and early adopters. However, these users are typically younger and do not have a lot of disposable income (they don’t buy stuff from ads). The next stage of adoption is to the early majority and late majorities – older people that have disposable income (they do buy stuff by clicking on ads).
The graphic to the right from eMarketer quantitatively illustrates where Snapchat established their beachhead – over 60% of the customer base is 24 or younger.
As Snapchat doubles there customer base by 2021, the composition of the user bases changes significantly:
- Overall, Snapchat users growth increases by over 90%
- Over 50% of the user base will be 25 years of age or older
- Users that are 24 or younger drop to 47%
The Billion Dollar Tweet – Arrogance, Greed, Pressure From Wall Street
Most of the time, good decisions make themselves if they are framed correctly and most of the pertinent information is available. So, let’s review some data:
- Kylie Jenner is the Queen of Snapchat
- Kylie Jenner was obviously not included in Snapchat’s redesign
- Kylie Jenner tweets disapproval of Snapchat”s redesign and the value of the company drops over $1B
- Snapchat states that Wall Street overreacted – not “we will fix this, we will embrace the Snapchat community to address their needs”, etc.
- CEO Evan Spiegel made it clear that the overhaul is here to stay – Have a New Coke
- Over 1.2 million people have signed a petition on Change.org asking Snapchat to remove the redesign
- Snapchat said the previous app design was confusing, and the format shunned older users and advertisers – code for we need to sell ads to generate revenue and profit to drive the stock price (not embrace users)
Like it or not, Kylie Jenner is just about as influential a celebrity as they come with 25M followers. In addition, her celebrity family has an estimated social media following of almost 1B when you combine all social media platforms). Companies can make it or break it by riding the backs of influencers like Kylie Jenner. Does Snapchat have a backup plan (influencers) or are they just arrogant? Uber seems to be recovering from arrogance, can Snapchat?
It seems like Snapchat is banking on the redesign to immediately leap them over the chasm to attract the 25 and older crowd.
Timing is everything and it is clear the kids aren’t alright.