How Snapchat is getting photobombed in India by its rivals

In 2017, a former Snapchat employee alleged in a lawsuit that a couple of years earlier, CEO Evan Spiegel was not interested in his proposal to pursue growth in international markets. Spiegel, alleged the former employee, said that Snapchat was “only for rich people” and that he wasn’t interested in expanding into “poor countries like India…” Snapchat denied the claims made in the lawsuit, which had caused an uproar in India.
Three years since that suit was filed, India has become one of the fastest growing markets for the company. At 74.35 million users as of January 2021, it is Snapchat’s second-largest market in terms of the potential audience that can be reached through advertisements, according to a joint report by media company We are Social and social media management platform Hootsuite. (Potential audience reach does not mean daily active users. It is the target audience an ad is estimated to reach every time it is posted.)

Snapchat’s parent Snap Inc touts itself as a camera company. Snapchat, launched on September 26, 2011, was a combination of snaps, for taking pictures, and chatting with friends.

Initially named Picaboo, it was founded by Stanford University students Spiegel, Bobby Murphy and Reggie Brown in California as a social media platform where photos would disappear in a few moments. Brown was ousted soon after but sued and received a $157.5 million settlement. After it began selling spectacles, the parent was renamed Snap.

In his first blogpost after it was launched, Spiegel wrote: “Snapchat isn’t about capturing the traditional Kodak moment. It’s about communicating with the full range of human emotion — not just what appears to be pretty or perfect.”

When it was launched, the app, it was available only on iOS and allowed only photos to be shared. Later, it was made available on Android and eventually also allowed videos to be shared.

Today, Snapchat, the social media arm, allows users to message, share photos and play games with their friends. All the content is designed to disappear soon after it is viewed, unlike in, say, WhatsApp, where users only now have the option of enabling this setting. Snapchat Users can also explore filters and lenses, which are design overlays to augment snaps or videos, and share them.

Reeling off some statistics, Murugesan said that a mindboggling 5 billion Snaps are created every day on average on the platform. Over 200 million users engage with Augmented Reality every day, on average. And over 250 million users engage every month with Snap Map, which captures events, breaking news and more from around the world.

The platform’s other key features include Discover, which features news, entertainment and Snapchat originals from its publishing partners and content creators. This is one of Snapchat’s most popular features in India.

Snapchat has also launched Spotlight, a feature to create videos a la Tiktok, which had over 100 million active users in January but is not yet available in India. Asked about why the feature isn’t available in India yet, Murugesan said: “We are not delaying the launch of Spotlight in India. We launched in a handful of countries last year and are actively looking to expand availability over time, but are doing so thoughtfully to ensure we can scale our rigorous moderation efforts.”

Snapchat’s rapid growth in India can be attributed primarily to the Covid outbreak and the ban on TikTok on June 29 last year. When TikTok was banned, its massive user base had to look for alternatives. Other social media platforms such as Instagram, YouTube, and multiple Indian platforms raked in followers. So did Snapchat, said Sahiba Dhandhania, CEO, Confluencr, an influence marketing agency.

The pandemic, too, played a role in helping the overall ecosystem grow as users began to spend more time online. “One large factor (in Snapchat’s growth) is Covid-19 and the increase in time spent online,” said Suneil Chawla, co-founder, Social Beat, which works on digital marketing with brands such as Paytm.

Two significant moves that Snapchat had made earlier helped the platform to take advantage of this. It tied up with Samsung to get the app pre-installed in Samsung A and M Series handsets. That was one of the key factors for the initial growth. India has more than 500 million smartphone users in the country. Samsung leads in the smartphone category, accounting for about 24 percent, according to market research firm Counterpoint.

Listing the company’s initiatives to drive growth in India, Murugesan said: “We’ve been working hard to make Snapchat accessible and feel both culturally and locally relevant. We increased support to nine languages. We now have over 30 partners on Discover publishing content covering many diverse topics and genres. We have also invested in a range of creative tools for cultural moments such as Republic Day, Diwali, Holi and Buddha Jayanti, as well as more regional festivals such as Pongal, Lohri, and Makar Sankranti.”

“Acceleration of growth in Rest of the World (including India) reflects the benefit of our ongoing investments to better serve our community, including investments in local content, AR Lenses experiences, language support, and marketing partnerships,” Snapchat said in its investor release.

This should ideally have been an inflection point for Snapchat in India. With the surge in users and brands warming up, it should have been raining deals for the company. But it is still a long way from becoming the top choice for advertisers. And unless the company can innovate quickly, it will continue to remain behind its rivals, say industry watchers.

Murugesan did not reveal the company’s revenue figures for India. “What I can say is that we have grown our revenues in India in response to enthusiasm from and successful outcomes for advertisers of all sizes.”

However, a source familiar with the company’s operations said Snapchat has been struggling to monetise in India. “I doubt if the revenue from India is more than $20 million,” he said.

Going by the company’s earnings numbers, revenues grew 62 percent year-on-year to $911 million for the quarter ending December 2020. India is clubbed with Rest of the World, where revenues increased 27 percent to $111 million y-o-y. North America accounted for about $659 million (72 percent y-o-y) and Europe $142 million (54 percent y-o-y).

Snapchat’s competitors boasted strong Q4 numbers, too. Facebook reported $28.07 billion in revenues for the quarter ended December 2020, led by the US. According to business intelligence platform Tofler, Facebook’s India revenue was about $175 million (Rs 1,277 crore) for the year ended March 2020, up 43 percent y-o-y. The company does not declare revenue from Instagram separately in its earnings reports. But media reports indicate Instagram accounted for more than a quarter of the company’s revenue in 2019.

YouTube generated about $6.9 billion in ad revenue for the December 2020 quarter, according to Alphabet’s earnings report. It is not clear how much of that came from India. However, Google India registered about $742 million (Rs 5385 crore) revenue for the year ended March 2020, up 35 percent y-o-y, according to Tofler.

The source cited earlier said the company started out with a small team to engage with advertisers and creators, and build strategic partnerships. But apart from the strategic partnership with Samsung, other deals have been few and far in between, said the source. These include tie-ups with the Dentsu Aegis Network to drive growth and support advertisers who target its young user base.

Murugesan also said that the company has collaborated with brands such as Amazon Prime Video, Swiggy, Nykaa, Spotify, and One Plus.

Gen Z — those aged between 13 and 24 years — makes up more than 70 percent of users on the platform. This niche user base gives Snapchat an edge over its rivals as far as this segment is concerned. For instance, Facebook’s user base has everyone from teens to senior citizens. In the case of Instagram, the vast majority of the users are aged between 18 and 35 years.

Influencers and marketing executives believe the company certainly has potential. “In Snapchat, there is less clutter,” explains Chawla of Social Beat, since most of the users are youngsters, making targeting easier.

Manish Verma, a Snapchat influencer and CEO of Social Thunderbolt, which specialises in Snapchat marketing, works with both US and Indian clients. He felt that “for brands targeting the 13-24 group, there is no better platform than Snapchat”.

According to 2011 Census data, India has about 229 million people in the 15-24 age group and 236 million who are 10-19 years of age, potential Snapchat users.

The issue of pricing and Snapchat’s small and niche user base (more Gen Z users compared to other platforms) are to some extent interrelated. Unlike Snapchat’s 74 million potential audience, its key competitors Instagram (140 million), Facebook (320 million) and YouTube (448 million) have more than doubled their reach for brands. This is also where they have an advantage over Snapchat in that their user base is way broader than the 13-24 age group that Snapchat attracts. Going by industry commentary, this is more or less the reason many brands choose Facebook or YouTube rather than Snapchat.
Brands that go for Snapchat include fast fashion brands, quick service restaurants and electronic items that target Gen Z either to sell products designed for this group or aspirational brands such as Apple, which wants to cultivate a loyal user base from an early age. Apple runs an ad campaign “Join the Get Active India Challenge” on Snapchat.

“Audiences that are on Snapchat are on Instagram. Why not maximise that footprint, leveraging Facebook and Instagram,” said Prashant Puri, CEO, AdLift, which works in social media brand marketing for firms like Jaquar, a bath brand.

“Let’s say I have $100 to spend on social media marketing. I would split up at least 70-75 percent across the Google (YouTube) and Facebook ecosystem. Probably 5-10 percent on Twitter and then 4-5 percent depending on the product I am selling for a test campaign on Snapchat,” Puri explained.

Snapchat’s initial pricing, which was on the higher side, hardly helped its cause. “Cost is a significant factor and has enabled YouTube and Instagram to capture a large part of the ad market,” Chawla explained.

The price, experts say, has been brought down and is currently on par or cheaper than some of its peers. According to data shared by AdLift, the cost per thousand impressions on Snapchat is Rs 100-200 as opposed to Rs 185-200 on Facebook and Rs 225-250 on Instagram.

In terms of innovation too, Snapchat does not match its peers. One of Snapchat’s unique features was Stories, which could be photos or videos that disappear within 24 hours, and filters.
Instagram was quick to latch on to their popularity. Inspired by Snapchat, it launched its own Stories in 2016 and later Reels, an alternative to TikTok, just as quickly.

Spotlight, Snapchat’s answer to TikTok, is yet to be launched in India. Launched in November 2020, it is quickly gaining traction and had about 100 million monthly users in January 2021. It was launched in the US, Canada, Australia, New Zealand, the UK, Ireland, Norway, Sweden, Denmark, Germany, and France.

This apart, Google and Facebook were able to leverage ‘Audience Network’, which allows them to expand and show ads even on other websites/publishers. “While Snapchat also has this, it hasn't scaled up as much,” said Chawla.

Snapchat’s ad engine is not robust enough, said another expert. The Chennai-based digital marketing executive recounted his recent experience advertising on Snapchat. “We recently ran a campaign for an automotive major in partnership with a publishing company. The target was to get 15 million impressions for the ad in a month, which we were able to achieve,” he explained. But the issue was that the company was not able to ascertain the profile of people interested in the product. “There was no way of knowing who had viewed the ad. In Facebook and YouTube they have options to generate leads. This is not possible in Snapchat,” the executive added.

While the ads take the users to the brand’s website, there is no way of knowing the scale of the success. “I still pitched it to four of my clients, including an affordable fashion brand, since it has many young consumers. But they are just not interested,” he added.

Puri of AdLift said that for many of his customers, Snapchat did not work and hence they primarily work with other social media platforms.

Snapchat set up an office in Mumbai, headed by Durgesh Kaushik, in August 2019, and had five employees in all, according to the source cited earlier. It also tied up with Gurugram-based ad-tech platform Tyroo for monetisation in India.
It is not clear by how much staff size has gone up, if at all, with the company keeping it a closely guarded secret. In his response to Moneycontrol, Murugesan expounded at length on the company’s “holistic approach” in building a team, without actually revealing a number. Among other things, he said: “We have opened our office in 2019 and have been taking a holistic approach in building the team — first focusing on establishing the functions that we need to succeed. We now have leads representing the growth strategy, partnerships, sales, content and editorial, talent and creative strategy teams.”

Facebook began its India operations in Hyderabad, in 2010, with 20 employees and a single team. Since then it has grown significantly to five offices (Hyderabad, Delhi, Gurgaon, Mumbai and Bengaluru) with multiple teams in sales, marketing, partnerships, and policy.

Chawla of Social Beat said that it is important for Snapchat to strengthen its workforce to focus on the Indian market in the area of marketing/user-acquisition, as well as content creation, which is picking pace in India.

For brands to tap into Snapchat’s Gen Z user base, digital marketing executives pointed out, there is a need for more awareness about the platform, which would require a bigger team in India. The platform also needs a robust advertising platform, which is currently lacks.

Arun, 24, has been a Snapchat user since 2019. “What I love about the platform is the filters and messages that disappear. Their filters are supercool, and follow people for their content,” he said.

But, he added, “not many of my friends are here, so I use other platforms like Instagram and WhatsApp more”.

And therein lies the challenge for Snapchat.