Retailers remain unconvinced as Snap posts US$2.2 billion loss

AAP & Internet Retailing

11th May 2017

Snapchat’s parent company Snap Inc has posted a loss of US$2.2 billion ($A3 billion) in the company’s first earnings report, amid stiff competition from copycat messaging apps.

The loss was higher than some analysts predicted and follows a steady drop in the company’s share price, since its record US$3.4 billion IPO in March.

Confidence in Snapchat was dented last month when Instagram revealed its Snapchat-like Stories feature had surpassed 200 million daily users, well ahead of Snapchat.

Facebook has added similar features to its other messaging apps, Messenger and WhatsApp.

Despite Snapchat’s popularity with a younger demographic, many retailers are skeptical about its potential as an advertising channel.

At a digital business networking event in Melbourne this week, e-commerce leaders Kate Morris, CEO and founder of Adore Beauty, and Andre Eikmeier, joint-CEO and co-founder of Vinomofo, confessed they are not fans of the app.

Digital marketing expert Alita Harvey-Rodriguez, managing director of Milk It Academy told Internet Retailing that Snapchat has made little headway among Australian retailers.

“Our results show that Instagram is still a much better platform to advertise on [in Australia],” she said.

“The adoption rate of Snapchat isn’t as high as Instagram, which has a much bigger hold on the market and a critical mass.”

After setting up an office in Australia last year, Snap reported in November that it had four million daily users Down Under, a tiny fraction of the more than 160 million people using it every day around the world.

Myer, McDonald’s, Priceline and Dan Murphy’s are among the comparatively few local retailers that have experimented with Snapchat’s sponsored geofilters and lenses.

That could soon change.

The social media platform recently launched a new ad product called Snap to Store, which lets retailers track whether digital ads lead to in-store spending.

Snap claims one ad drove over 42,000 incremental visitors to a single location of Wendy’s, a US-based fast food chain that trialled the ad product last year.

While Snap to Store is still in beta in Australia, Harvey-Rodriguez believes the ability to quickly and easily track the impact of digital advertising on store sales is a game-changer for retailers.

Snapchat also recently announced that it will allow users to send images and video without time limits for the first time, expanding one of the app’s signature features in what is seen as an attempted fightback against Facebook.

AAP