Company

1. Snapchat was founded by three Stanford University students (Evan Spiegel, Bobby Murphy and Reggie Brown) as an app that straddles the line of being a messaging/communication medium and social media. The app is essentially an instant messaging platform where messages appear only for a short time on the recipient’s device and then disappear.

2. Snapchat has 2,800+ employees. Their shares were valued at $21 billion as of 2018 and raised to an all-time high of $36.4 billion by 2020. Snapchat has a global revenue of $2.5 billion.

3. In 2016, Snapchat represented 2.1% of the Social Media market. As of 2018, they had 187 million global users. By 2021, Snapchat had grown to a reported 356 million daily active users worldwide and is considered the world’s 13th most-popular social media platform.

4. Other image-based communication apps allow for more lasting images to be hosted; by forcing the images to be ephemeral, the Snapchat app fosters a communication style that is looser, less encumbered by the fear of perpetual viewing. Images that are sillier, grosser, or more sexual than what a person would typically be comfortable messaging can be sent to recipients using Snapchat with less caution.

Competitors

1.  Snapchat’s main competitor is Instagram (owned by Facebook), the dominate image sharing app in the market. For several years, Instagram has been copying features from Snapchat and growing them faster by leveraging its existing user base.

2.  Snapchat’s second greatest competitor is TikTok (owned by China-based company ByteDance). TikTok has a very similar user base and even though TikTok is currently focused more so on public sharing compared to Snapchat’s private sharing, Bank of America/Merrill Lynch analysts wrote in a 2019 note to investors, “We think there is some risk of TikTok making product changes that move closer to Snap’s core functionality.” Then in 2020, Snapshat release a new feature titled “Spotlight” which was specifically designed to compete with TikTok’s core features, making their rivalry more intense.

3.  Clones of Snapchat in foreign countries also offer competition, such as the Korean based “Snow”. These clones reduce Snapchat’s global reach, and if they were to gain traction could potentially upset the market in other nations.

4.  All social media activity outside of Snapchat offers a degree of competition, as each platform battles for the attention of users. Since users each have finite amount of time and attention to devote, any time spent on a different platform ultimately decreases the amount of time that can possibly be spent using Snapchat.

Customers

1.  Snapchat’s primary users are females aged 18-24.

2.  Snapchat’s secondary users are females aged 12-17.

3.  Primary customers prefer to use Snapchat as a proxy for texting and enjoy the increased communication personalization afforded them by the many visual features of Snapchat, like lenses and “face texting”.  These new communication dimensions allow conversations to feel more personal and emotional than flat text.

4.  Secondary customers appreciate that unlike most other social media platforms, Snapchat removes the pressure of public approval. Users have a greater deal of control over their audience, posted content is ephemeral, and content is posted merely for fun instead of seeking “likes” or to craft a digital persona for the world to see.

Collaborators

1. Though Google happens to be a Snapchat competitor due to their ownership of rival social media platform YouTube, Google is also Snapchat’s largest collaborator since Snapchat hosts its app using Google’s cloud hosting service “App Engine”. Without hosting, Snapchat would not exist.

2. The mobile phone industry (with producers like Samsung, Huawei, Apple, and Xiami) also acts as collaborators, due to Snapchat only being available to use on mobile devices.

3. In 2018, Snapchat partnered with Storyful, NewsWhip, SAM Desk, and Tagboard (all news-focused platforms used by journalists and media organizations) to open up news-related content for wider distribution.

4. In 2020, Snapchat collaborated with the World Health Organization (WHO) by launching a new augmented reality technology to raise awareness of the COVID-19 Solidarity Response Fund and illustrate how it supports the work of WHO. The new lens makes it easier for users to donate while logged into the platform.


PEST Analysis

Political

1.  Due to concerns of underage sexting, online bullying, and the dangers of online predators, a nationwide law could be enacted that prohibited ownership of phones for anyone under the age of 21. This would be devasting for social media apps like Snapchat that have a younger user base and are only accessible by mobile devices. 

2.  Certain legal protections currently afforded social media platforms by the Section 230 amendment of the Communications Decency Act are currently being targeted by some lawmakers and could soon be rewritten or revoked. Proposed changes would result in social media platforms being held responsible for user-posted content and for how they choose to moderate that content.

Economic Trends

1.  Some analyst expect that a rise in inflation is imminent because of recent increased government spending. Inflation would likely result in a decrease in the public’s buying power. This might lead to a decrease in advertising spending which in turn would hurt social media apps that rely on advertising revenue.

2.  Total employment in the U.S. economy is projected to grow by 15.6 million during the 2012–2022 decade to reach 161 million; this represents a 10.8-percent employment increase. Since more people will be employed and earning salaries, the amount of disposable income should also rise, leading to greater advertising efforts as companies push to encourage greater spending.

Social Trends

1Due to Covid related lockdowns and fears of contagion, many people were forced to replace in-person socialization with digital alternatives. Even though these concerns are now beginning to ease, it is expected that the new users will remain active on these platforms.

2.  A social trend that does not favor social media platforms is that America is becoming increasingly health conscious, and as a result are beginning to villainize time spent sitting indoors using a phone app in favor of time spent outdoors or exercising. Enjoying fresh air and sunshine for example is viewed as a healthy choice, while hours spent staring at a phone screen is framed less positively. 

Technological

1.  Augmented Reality is primarily experienced via a wearable device that overlays digital content on top of the real world, thus enabling a new information-delivery paradigm. While isolated applications of AR have been around for decades, several companies are currently developing new technologies in hopes of popularizing these devices: for example, AR devices will soon allow for fitness tracking, wearable smart assistants, wearable cameras, line-of-sight navigation, and heavy integration of mobile devices.

2. Using AI to create “deepfakes” is increasingly becoming a cyber security concern, as recent technological developments have made it possible for users to create entirely fictional avatars, complete with AI generated images, videos, and voices that are difficult to discern from reality. This makes it easier to deceive users online by interacting with users while hiding behind the guise of a digital avatar.

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