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Dubai: Boomers may be just okay online, but for Snapchat, this generation is exactly who the company is looking for to fuel its growth.
Well, boomers and generation X’ers, actually, after long being popular with much younger users including teenagers.
Snap Inc, the US-based developer of Snapchat, said it sees an opportunity to “age up” its consumer base in the GCC region and in other parts of the world. That, coupled with its investments in Augmented Reality (AR) through its Spectacles, are among factors expected to drive user growth going forward.
At the end of the third quarter of 2019, Snapchat had 210 million daily active users, compared to 203 million in the second quarter of the year and 186 million in the third quarter of 2018. The growth in numbers was seen in North America, Europe, and the rest of the world, Snap Inc said in its latest financial statement.
“We believe that the behaviours we see right now are very retentive, so as people age out of university level, they stay with the service. People who started the service five years ago, for instance, retain at a higher than 90 per cent level five years later, so part of the age-up strategy is really a matter of time,” said Jeremi Gorman, Snap’s global chief business officer.
Snap is also planning to work with more local publishers and bring in originals and local content on to its app to provide users with a more customised experience.
Jacob Andreou, vice president of product at Snap, said that there are challenges with getting older users on Snapchat, including the usability of the app – something Snap is working to ease.
“We really believe that the core product value of the service is this idea of visual communication between close friends and people you care most about. We really believe that’s a universal thing. But there are a few challenges when it comes to the older demographics that do make our service have a few more barriers to overcome,” he said.
Andreou and Gorman were talking to Al Khaleej Today during a visit to Dubai, part of a trip to the Middle East to meet clients, agencies, and experts to learn more about the region.
Middle Eastern traffic
For Snap, the Middle East, and particularly the GCC, is a key market, where consumption rates are higher than the global average. In the UAE, for example, around 33 per cent of people between the ages of 13 and 34 use Snapchat on a daily basis, Gorman said.
In Saudi Arabia, 90 per cent of people in that age group use the messaging and social media app, and they spend twice as much time on Snapchat’s Discover feature compared to their global peers. (North America is still Snapchat’s largest market, though, with 84 million users, as of the third quarter of 2019. This is in comparison to 65 million in total in Europe, and 61 million across the rest of the world, as per Snap’s data.)
Besides interacting with friends and family, users in the GCC have an “enormous amount of activity” with influencers and other popular accounts, Andreou said, and Snap is planning to invest into adding features that allow creators to engage with their fan base on a personal level.
“We’re going to be investing in diversifying the content offering in countries through the GCC, and what that means is onboarding more local publishers, locally-made shows and originals that really make Snapchat feel like it was made for this region.”
Hussein Freijeh, Snap’s general manager for the Middle East, described the GCC as one of the most engaged regions for the company. He attributed that largely to the younger population in a region that loves to adopt new technology early on. “There is a gap in content creation in Arabic in general and for the local communities, and for millennials,” Freijeh said.
“I think a lot of influencers and creators took advantage of that and used platforms like Snapchat and many others to fill this gap. So, in general, they look at us as a mobile TV in this part of the world.”
He added that the company is working on improving the experience of the app on Android phones, and bringing that up to the same level as the iOS experience in order to bring in more users from regions such as North Africa where Android phones are more popular.
Snapping back in 2019
From a global perspective, Snapchat’s user numbers have been on the rise lately – a stark contrast to performance in 2018 when the company saw its first dip in numbers (from 191 million in early 2018 to 186 million at the end of the year). That decline came with a redesign of the app that left many users frustrated. To top it off, Facebook-owned Instagram rolled out new features that were similar to Snapchat’s.
Celebrity Kylie Jenner in early 2018 tweeted that she was no longer using Snapchat. That statement alone wiped over $1 billion in Snap Inc.’s market value as investors lost faith in the app. In fact, share prices today (at around $15) are still lower that they were before Jenner’s tweet, and hit a low of under $5 in December 2018.
With that came a decline in user numbers in the second and third quarters of 2018, before stabilizing at 186 million.
Today, those dips are behind Snap Inc, whose share prices and user numbers have been on the rise since the start of this year. User numbers have gone up by around 13 per cent in the first nine months of 2019 (to 210 million), while stocks have more than doubled in the price (from $5.7 in late December 2018 to the current $15.3).
Both Gorman and Andreou believe the redesign of the app was an important step, and though it slowed down growth in 2018, it is now paying off. Gorman said the company has also been able to deliver in 2019 on its three core metrics: growth in revenues, growth in daily average users, and progress in reaching profitability.
Loss-making Snap Inc is expecting $540 million to $560 million in revenues in the fourth quarter of 2019, compared to $446 million in the third quarter, but its executives said they were not issuing guidance on profit outlook.
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