Facebook may be the dominant player in social media, mobile advertising, and news, but Snapchat is the most formidable competitor it’s ever encountered. Snapchat has a great feel for what its more than 100 million daily users want, and it moves fast. Combine that with its attractive demographics—86% of Snapchatters are between the ages of 13 and 34—and you can see why these two companies are now battling it out in one of the most passive-aggressive rivalries since the Cold War. Neither company nor its leaders publicly say anything untoward; they just let their product updates speak volumes. Snapchat woos media companies with its roster of Discover channels; a few months later, Facebook woos them with Instant Articles. Facebook launches Sports Stadium to create a home for fans watching a big game; nine days later, Snapchat introduces live score and stat filters for pictures and videos from NBA games and other events.
A significant driver in Snapchat’s growth is that 60% of its users upload personal items every day. Even if they are posting just one photo or video (and they’re clearly doing much more given the popularity of Snapchat Stories, which stitches together a series of images and clips to share for 24 hours), compare that to the 400 million users of the Facebook-owned Instagram, who share 80 million photos daily—at best a 20% participation rate. Simply put, Snapchat is getting more than three times as much participation from its large cadre of die-hards.
Snapchat achieves this feat by being designed differently from other social media. It’s a cliché to discuss how Snapchat can be jarring to the uninitiated because it opens directly into a camera app, but this overshare-ready user-interface signals Snapchat’s priorities to its fans. And it makes it much faster to create and share content.
Not that long ago, Facebook tried to thwart Snapchat by creating a rival app. In late 2012, the company released Poke. In mid-2014, it fired off Slingshot. Both flopped. (Facebook CEO Mark Zuckerberg also reportedly twice tried to acquire Snapchat, for $1 billion and then $3 billion, and Snapchat CEO Evan Spiegel rebuffed the offers.) Facebook’s strategy has evolved so that it now uses several of its established products to give its dramatically larger user base an alternative. Instagram continues to subtly encourage more selfie self-expression, and in an effort to satisfy users who like Snapchat’s more private communication, Facebook Moments lets them share photos only with select friends. Facebook’s rollout of its Live streaming-video product includes such Snapchat-like features as on-screen doodling and filter overlays.
Perhaps unsurprisingly, Facebook is also reportedly toying with launching its own camera app, which, like Snapchat, would prioritize creating and sharing by opening into a camera view. There were reports this spring that Facebook’s users are uploading less original content—like photos of friends and family—than previously. As Snapchat becomes more broadly popular (every professional sports league has a Snapchat deal, to cite one harbinger), it makes sense to give users this now-mainstream interface, while also making Snapchat feel a little less special. Meanwhile, Snapchat continues to push the boundaries of taste and cool by adding such features as face-swapping and garish, but technically masterful, filters that can add alien eyes or flaming skin to a selfie.
But if Snapchat is leading the charge in the social-sharing escalation, it has a long way to go to rival Facebook’s financial leadership. Rapidly growing, but very young, Snapchat is reportedly shooting for $350 million in 2016 revenue. By contrast, looking only at Facebook’s Instagram business, analysts are so bullish that they anticipate the service could generate between $2 billion to $3 billion in revenue this year. Overall, Facebook’s expected to generate $26 billion in 2016. Advertisers love Facebook’s sophisticated targeting capabilities and its unprecedented reach. Its lead in dollars and audience gives it so many advantages, plus buys it time to find new ways to counter Snapchat.
Still, the social leader will need to decide just how patient it should be, and just how closely it wants to clone Snapchat to beat it. Snapchat claims that its users quintupled their video consumption between May 2015 and April 2016, from 2 billion to 10 billion views daily. That’s more than Facebook’s latest reported total of 8 billion (from last November). But are rainbow-vomit filters really what Facebook wants associated with its brand? Or would Zuckerberg be better served to go back to Spiegel with an offer that he and his investors simply can’t refuse?