Is Snapchat Threatening Twitter?

Recently, Bloomberg reported that Snapchat’s daily active users had crossed 150 million, surpassing Twitter ‘s figure of 140 million daily active users. While Twitter TWTR -3.97% does not report this metric, it has 310 million monthly active users and the company stated that about 44% of these users interact with the service every day. Snapchat is extremely popular with teens and millennials and is witnessing strong user growth.

In November last year the company introduced “Story explorer”, which allows users to see more snaps of a particular moment from every perspective. It thus competes directly with Twitter’s “Moments” app. It is also focusing on advertisement revenues and recently hired an executive from Facebook who was in charge of the Facebook FB -1.63% Audience Network. This indicates that the company might be putting together a dedicated sales team together and automating its ad buying process. As Twitter appears to be losing advertisers due to low engagement levels and a stagnant user base, four year old Snapchat does appear to be a very strong competitor for Twitter, which is struggling despite a decade of its existence.

Snapchat’s New Initiatives Can Attract More Advertisers

While Twitter has been taking several steps to increase user engagement and expand its user base, an increasing number of advertisers are planning to decrease their spending on Twitter. Twitter’s year-on-year growth in advertising revenue declined from 111% in FY 2014 to 59% in FY 2015. Snapchat’s initiatives to attract advertisers will add to Twitter’s woes.

Its recent hire from Facebook can help the company to launch an application programing interface which would allow it to automate the ad buying process. An API could also improve Snapchat’s ad targeting, increasing the value of its ads and the opportunities for its advertisers. Snapchat’s high engagement levels and faster growth rate can attract advertisers to its platform, reducing Twitter’s market share in social media advertising in the future. In a 2014 survey, Twitter narrowly beat Snapchat in terms of total minutes spent on their platforms.


Recently, Snapchat reported that users spend nearly 25 to 30 minutes on its platform and the company is witnessing rapid growth. Its video views increased from 2 billion daily views in May 2015 to nearly 7 billion daily views recently. The platform’s unique feature of posts getting automatically deleted within 24 hours or once they are viewed is an interesting way of increasing engagement.

Users freely share content on its platform without the fear of being judged as the post automatically gets deleted. While the company has still not aggressively pursued advertisers, it can put a dent on Twitter’s advertising revenue, if the latter is not able to increase its engagement and user base. As per our estimates Twitter’s U.S. ad revenue per 1,000 timeline views will increase from around $12 in 2016 to $19 by the end of our forecast period.


However, if intense competition from Snapchat leads to a slower increase in these revenues and they reach only $ 14 by the end of our forecast period, there can be a 10% downside to our price estimate.

Certain features offered by Snapchat compete directly with Twitter and the former is more popular with younger users. Twitter is already facing tough competition from Facebook and its advertisers are looking at alternative platforms. If Snapchat pursues an aggressive strategy to woo advertisers, Twitter will feel the heat.

Sorce: Forbes

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Written by Unknown on Saturday 11 June 2016