Opinions And Ramblings By Adam Kmiec On All Things

Tag Archives: Analytics

5 Reasons To Not Be Bullish On Snapchat

Snapchat

I like taking the contrarian point of view. I’ve yet to meet a better champion of the Devil’s Advocate. As Patton perfectly stated, “If everyone is thinking alike, then somebody isn’t thinking.” I have found that there are 2 types of Devil’s Advocate players. The first, simply likes to disagree. They will always take the opposing point of view, just to feel the thrill that comes from a spirited debate. I know that person well. On more than a handful of occasions, I’ve seen that guy, staring right back at me, in the mirror. Now, the other type of Devil’s Advocate, is one who brings some type of data and insights to the discussion to back an opposing view. That’s the version I’m going to play today as I outline reasons you shouldn’t be bullish on Snapchat.

Before I get started, I think it’s important to get on the table that I’m saying Snapchat is a bad investment. I’m not saying don’t put your money there. I’m not saying, it will fail. There’s great value in playing the role of the Devil’s Advocate. As the CIA (yes, that CIA) states (pdf) in their training, The Devil’s Advocate’s “primary value is to serve as a check on a dominant mind-set that can develop over time among even the best analysts who have followed an issue and formed strong consensus that there is only one way of looking at their issue.” With seemingly a new “Snapchat is killing [insert competitor]” article, popping up every day, I thought this was a great time to introduce the Devil’s Advocate tool to provide some opposing views.

Bad Data For Advertisers

When Snapchat first launched, it required only an email address and a password. The core base of Snapchat’s power users were people who bought into the idea that anonymity and a self-destructing (as we saw from the repeated data breaches, not true) approach to content, created a safe space for them express themselves, without pressure. All you needed was an email address and a password to join. Realizing how bad of an idea this was from a future business potential standpoint, some time later, Snapchat started requiring a first name, last name, birthdate, username and a cell phone number. Better, but compare the rich data trove Facebook offers advertisers. It’s the equivalent of Snapchat bringing a paperclip to a gun fight. Beyond the core data in the registration flow, Snapchat can also track location. All of this, in theory, is pretty good, but not great. Data drives accountability and validation. You don’t necessarily need all the data in the world. Sometimes, you just need the right data.For example, Google, with their core paid search offering can track intent all the way through to direct purchase, despite not knowing your name, email address or birthdate. Today, the Snapchat is rudimentary, at best. They know that. It’s why they continue to increase the investment in their data stack. But, the more they ask of their users, the more the alienate the base…who bought in to Snapchat, for an ad-free and anonymous way to share.

The Fickle Nature Of Youth

Snapchat has a user base that 70%, under the age of 22. Their growth is from kids. The last thing kids want to do is be where their parents are. It’s a truth. As adults start joining Snapchat, kids will move to the next “it” platform. This is a cat and mouse games, kids have played with their parents, since the dawn of time. Snapchat needs the older audience to join. Need, I say. Why? Older people have actual money. They’re a more valuable marketing segment, because they’re also more trackable. They have credit cards, loyalty cards, etc. Those are important elements for matching ad impression data to purchase, to determine the value and impact of an advertiser’s dollars. Without that matchability, an ad campaign on Snapchat is the equivalent of taking a bunch of money, lighting it on fire and wondering if it drove sales. The blow back from the original customer base (aka young kids) is already happening in full force.

Kids don’t want to hang out with their parents; it’s simple as that. Balancing the need for adults and their money, while keeping the experience genuine for the core/original user base, is a difficult balance to maintain. When you consider that millennials use more apps and spend more time in apps, than any other consumer segment, there’s always another app vying for their interest. And, just as the youth was the first to MySpace, Facebook, Instagram and yes, Snapchat, they’re also the first to abandon that platform in the search for the next breakout platform…especially, when they’re parents start crowding their space.

Chasing Cheddar Ruins The Experience

Snapchat, at the end of the day, is a business. They have investors. They have employees. They need money to pay back investors and to keep paying employees. This is basic economics. So, how do you make money for an app that’s free? Well, that’s easy. The oldest rule in monetization for apps/platforms has always been, if you’re not paying for it, you are the product. That’s right, they make money, just like Facebook and every other social network, but selling information about its users to advertisers, who then pay Snapchat money to advertise. Again, not a new concept. But, here’s what happens, when you’re core group of customers (remember the young, under 22 year olds, who joined an add free app) start seeing ads.

Snapchat Users Hate Ads

Granted, every social platform goes through this cycle. The launch. They grow by focusing on the product. All the while, they’re harvesting user data and building an ad platform. Said platform is ready and they introduce ads. As they introduce ads, users say, they’ll leave. Most don’t. But, here’s the rub. Millennials “aren’t influenced at all by advertising. Only 1% of millennials surveyed said that a compelling advertisement would make them trust a brand more. Millennials believe that advertising is all spin and not authentic. That’s why they use Tivo to skip commercials regularly and avoid banner advertisements on Facebook and various news websites.” – That’s a big problem, if you’re a Snapchat advertiser.

A Quickly Eroding Premium

To me though, what offers the most pause for being bullish is how quickly the Snapchat ad product went from being an insanely priced premium offering to being reduced, reduced and reduced again. The drop, inside of 2 years, from $750,000 to $100,000, is staggering. Glass half full people will say that the cost was reduced as the platform has scaled and now moved to an API offering, which means you can use a 3rd party platform or DSP to purchase media. Ok, let’s go with that. I will accept that. However, the minute Snapchat moves to a biddable inventory world, two things will happen. First, my point about lack of great data will become more apparent. When you can buy on age, gender, interest, device and an infinite set of options on Facebook (as an example) and can only buy on a limited set of targeting criteria in Snapchat, the data disparity becomes crystal clear. Second, DSPs are all about performance. That’s the reason you use them. DSPs also typically scale across platforms. For example, Brand Networks, one of the approved Snapchat DSPs, can also buy media across Facebook, Twitter, Instagram, Pinterest and others. That means, as a marketer, you’ll have comparative data for performance. Said, differently, when someone asks where you should spend your next $1, the data will be even clearer.

Voodoo Math And A Lack Of Standards

As discussed above you need clean data as a baseline. Part of clean data is standardization. For example, if I asked you, do you weigh more than me? An easy way to determine the answer would be for both us to get weighed on a scale. But, if you used one type of scale and I used a different scale, we would have far too big of a variable, to trust the answer. But, if we both used the same scale, we’ve eliminated a critical variable. When marketers buy ads, it’s no different. The IAB, love them or hate them, has standards for every type of ad format out there. For example, how to measure an impression, what a click is and what counts as a video view. Really, I’m serious. Go check it out (pdf). Now, the IAB is pretty clear about what a video view is. They say, “a video ad is viewable when at least 50 percent of the ad’s pixels are visible on a screen for at least two consecutive seconds.” That’s pretty clear, right? Now, if you want to exceed the benchmark, more power to you. For example, YouTube counts a video view as being 30 seconds. Yes, 30. That’s 15X above the standard. Facebook and Instagram use a 3 second threshold. That’s 50% more than the IAB’s guidance. Why is this important? Think about your own mobile habits. How many times have you accidentally clicked an ad or started a video? More than you can recall, right? Well, those mistakes, shouldn’t count as a view. With Snapchat, they charge, on a $0.XX per view. When you market $0.03 per view, that sounds cheap, right? But, to get to scale (say 10 million users), where you want each person to see something 3X, that’s a $900,000 investment. Not chump change. But, if you’re a Snapchat user, you know how easily it is to click on something accidentally, you also know how quickly you can skip through snaps. By not even hitting the IAB standard of 2 seconds, you can’t compare apples to apples, let alone apples to oranges. Standards, matter.

I have no idea if any of the above means, Snapchat won’t be successful. But, part of evaluating any new partner, technology (eg Virtual Reality) or tool, is playing the role of the Devil’s Advocate. Taking the time to do that, is what helps ensure you don’t fall victim to Shiny Object Syndrome.

Something that’s really hard to do, especially if you have a passion for innovation, is to balance what might great for the business with makes a platform really cool for the user. The business might want more ads and more targeting, but doing so impacts the user experience. That’s the tight rope any company walks as they look for ways to drive revenue.

The other thing that’s far too easy to do is to point at the faults, without recognizing the upside. The sunk cost in failing can often times be more beneficial than waiting for everyone else to have learned, experimented and optimized from day 1.

That said, if you’re in the driver’s seat, in your organization, you have a responsibility to ask the tough questions, poke holes, understand the risks, generate agreement in why you’re going to do something and then drive accountability.

The Beautiful Trackability Of The Web

My single favorite thing about the web is trackable the web is. I’ve been dealing with a repeat spammer and verbal abuser lately. With every comment this person leaves or email they send to me, I’m able to collect a little bit more data. Right now here’s what I’ve learned:

1. Based on his IP Address and Hostname I know he’s using his work time and computer to spam and verbally abuse me; that’s not a good idea.

2. The IP address and Hostname info was most valuable. Using it I was able to edit my .htaccess file to block his abulity to see my site from work. I also used Disqus’ options to block that IP address range from posting comments . So, he’s resorted to home based spamming and abuse. Easy enough. Again, every action is trackable. Using the IP Address info I traced him to his internet service provider: Verizon Fios. How nice of Verizon to give direct access to their spam/abuse contacts 🙂

If he stops now, I’ll cut him some slack. If not, I’m going to keep playing this out – collecting all the information and once I’ve grown bored I figure I’ll turn it over to the right people.

You’d think a guy who was working at a law firm in Chicago would know better than to break the law.

Quick update – the home spam is coming from a different person; well a different state at least.  This makes it all the more interesting and fun.  Already traced it to the source (still Verizon Fios).

Quick update #2 – The spam is is coming from a lawyer working at Alcoa corporation.  Tsk. Tsk.

Rethink The Funnel – Why Real Estate Is King

By now those who know me are tiring of my constant cry, “Real Estate Is King.” I’ve been telling anyone who’d listen for the past year and a half that your brands need to be owning property all over the monopoly board. Just owning Boardwalk isn’t going to cut it.

What does that mean? Since the dawn of the internet we’ve all been following the same funnel based model for success:

  1. Run a bunch of advertising
  2. Have the call to action for the advertising be to the brand’s site
  3. Get people on to the site
  4. Convert the people

In applying this model we were trying to drive traffic to 1 destination. In doing so, the focus was always on Unique Visitors. The baseline and focal point for success rested on increasing the number of unique visitors. If you were estimating a conversion benchmark of 10%, having more unique visitors increased the total number of conversions. Makes sense.

But, in leveraging that model, we didn’t take into account all the other interactions taking place throughout the web. Often these interactions were smaller…micro if you will. Despite being small, they definitely mattered; and they still do.

As companies look to engage consumers where they are (Twitter, Blogs, Facebook, etc.) something interesting is going to happen. Unique Visitors to the site are going to decrease. They’re going to matter less because the funnel isn’t linear.

Best Buy and Amazon recently announced that they are going to make their inventory available to any and all developers who want to create apps, widgets, or the like so that sales of the product could happen on this site. The idea is that they don’t care where the sale takes place, so long as it takes place.  The path to purchase isn’t linear. Think about it. You could be on Facebook with the Amazon App installed, see a deal on that book you added to your wish list, and then buy it right there…with NO need to visit Amazon.com. Now, that’s value.

But, what are we going to do about those decreased traffic numbers? The implications are huge. Online publishers set their value based on their audience size. Is your site less valuable because it now gets less traffic? Again, maybe the real point is we need to look beyond unique visitors when determining what success looks like.

Make no mistake about it, real estate is king. If your focused on hoping people land on Boardwalk you’re going to lose this game. Start buying up property now.