Snapchat's ambitious plans to advertise, socialize, and revolutionize how we watch movies.

Snapchat’s Ambitious Plan to Become More Powerful Than TV

Snapchat’s Ambitious Plan to Become More Powerful Than TV

Business Insider
Analyzing the top news stories across the web
Feb. 28 2015 10:00 AM

Snapchat’s Ambitious Plan to Become More Powerful Than TV

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This is the face of world domination.

Photo by Lionel Bonaventure/AFP/Getty Images

This post originally appeared on Business Insider.

The most popular TV show of fall 2014 was NBC's broadcast of Sunday Night Football. It averaged 21 million viewers per week. The strongest cable show was AMC's The Walking Dead. Its midseason finale, in November, reached 14.8 million people. Big numbers, right? Try this one: 24.79 million.

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That is the number of people who, on the evening of Jan. 26, and during the next 24 hours, watched a video broadcast on their phones depicting the sights and sounds of New York's “Snowpocalypse.” Unlike Sunday Night Football and The Walking Dead, the camera operators for the Snowpocalpyse broadcast were not professionals. They were mostly teens or adults in their 20s, shooting videos and photos with their phones, often photos and videos of their faces. They were Snapchat users.

Snapchat started out in 2012 as an app people could use to send one another disappearing photos. Initially pretty much everyone assumed it was an app for sexting. They assumed this because Snapchat was created by three rambunctious Stanford fraternity brothers. They assumed this because, in early marketing materials, one of those founders pitched Snapchat as a way young men and women (“betches”) could share “incriminating photos” with one another. They assumed this because the app was most popular with teenagers and college students.

Sharing naughty photos probably was and is a big part of why some people use Snapchat. But as early as mid-2014, disappearing photo sharing was no longer Snapchat's most popular function. It was something called Snapchat Stories.

Launched in late 2013, Snapchat Stories are in the same social media genus as Facebook posts, Twitter tweets, and Instagram photos. A user snaps a photo or a video and taps a button, and the video or photo is stitched into a single video—the story—that is then shared with all of the user's friends.

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There are two major differences between Snapchat and Facebook, Twitter, and Instagram. The first is that Snapchat Stories disappear after 24 hours. They are, in this way, almost live events. Like broadcast TV in an era before DVR or VCR, if you miss a story during its 24-hour run, you will never see it again.

The second major difference is that Snapchat Stories are not automatically displayed in a vertical stream of content the way Facebook posts are in its News Feed, tweets are in the Twitter app, or photos are in Instagram. A user can get to a friend's story only by opening the app and swiping right, to a screen called the My Friends list. It is a list of friends who have posted stories in the past 24 hours.

Then the user has to touch one of those names and hold that finger on the screen as the story plays—remove the finger, and the video stops playing. If you're not paying attention to your friend's story anymore, Snapchat knows.

The night of Jan. 26, after predictions of a historic snowstorm, thousands of New Yorkers were taking photos and videos of the city's snowy streets and adding them to their stories. Meanwhile, over in California, a team of Snapchat employees was skimming through the videos and photos being posted in New York that night and selecting the best ones to stitch into a single megastory.

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Snapchat then published this onto every single Snapchat user's My Friends list. Over the next 24 hours, 25 million people watched this megastory. Then, as with every Snapchat story, it disappeared. Snapchat calls these megastories Our Story. It first produced one back in June, during the Electric Daisy Carnival in Las Vegas. 

Since then Snapchat has made megastories about New Year's Eve, the Golden Globes, the National Dog Show, something called the Wally Festival, the Daytona 500, Duke's home basketball game against North Carolina, fashion weeks in the U.S. and Europe, Vanity Fair's Oscars afterparty, and dozens more events.

The company will not come out and say exactly how many people watch these megastories, but we have been able to suss out some figures. This past fall, Snapchat CEO Evan Spiegel said Snapchat's megastories about college football games attracted larger audiences than the audiences that watched the same games on TV.

One of the Snapchat users who took a video that was stitched into Snapchat's megastory about the Snowpocalpyse told a friend that the app on his phone showed the video was watched 24.79 million times. We have been able to confirm that the number meant the video was watched by 24.79 million individuals. 24.79 million! It's a staggering number.

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Remember: The Walking Dead midseason finale reached 15 million, and Sunday Night Football reached 21 million. Those are the biggest hits on TV, and their audiences are smaller than Snapchat's. Though Snapchat is in talks with marketers about the idea, it does not yet run advertising in its megastories. It is impossible to imagine that it will not in the near future.

The reason: Never has there been a content format more perfectly suited to make money than Snapchat Our Story.

Consider the following traits of Our Story videos:

  • The audience is 100 percent engaged. Because users have to press and hold to watch Snapchat Stories, advertisers will know whether their ads are being watched. The same cannot be said for TV commercials, which you can avoid by walking to the kitchen, or a Facebook and YouTube video, which you can leave open in another tab or even just put in your pocket.
  • They are opt-in. A Snapchat user has to go through a couple of screens to find a story to watch. It is a very intentional act. Facebook, Instagram, and Twitter ads are much easier to accidentally bump into. 
  • They provide the right context. A story about a fashion week is a perfect place to run an ad from L'Oreal. A story about the Duke-UNC game is a perfect place to run an ad for Gillette.
  • The have the right demographic. According to Business Insider Intelligence, more than 60 percent of Snapchat users are in the 18-to-24 age group. That is a coveted demographic for advertisers.
  • They are nearly “live.” One reason ESPN and Turner are willing to pay $24 billion to broadcast NBA games is that, in the era of DVR, on-demand, and Netflix, TV sports are just about the only thing anybody watches live anymore—and advertisers love to advertise against live content.
  • They are broadcast scale. Advertisers love commercials—video advertising—because it is easy to tell a story with it. Advertisers also understand that consumers are spending more time with digital products and less with TV. But advertisers hate how small online TV audiences are. They want to spend lots of money on spots they know are going to be seen in the right context by a lot of people. They want broadcast scale.
  • They are actually great videos to watch. No one wants to advertise against boring, bad content. Snapchat's megastories are not boring or bad. In fact, they are an exciting new entertainment format. They give viewers live, intimate access to events they would never be able to attend on their own, like the Vanity Fair post-Oscars party. While the biggest of live events covered by TV are captured by maybe a dozen cameras at most, Snapchat's megastories can be stitched together using video from thousands of cameras. Finally, Snapchat's best Our Story videos can sometimes do something magical; they can give you that Being John Malkovich feel of actually being inside someone else's head in another place for a moment. The trick is that they are made up of the kind of photos and videos you would take with the very same device you are using to watch the video. It is almost as if you are at the event being recorded, looking at a video or a photo you just shot. The size of Snapchat's Our Story audiences is terrible for Google, Facebook, and broadcast TV. According to Nielsen data from 2013, only 58 percent of people aged 18 to 24 watch any of the four big TV networks. Average prime-time TV ratings on the four major networks declined from 6.1 million viewers per show in 2007 to fewer than 5.6 million in 2012. If those numbers keep shrinking, advertisers are going to start looking for other places to put the $174 billion they spend on TV advertising every year.
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When Google bought YouTube for $1.6 billion back in 2006, it was with an eye toward making it one of those places. But YouTube was built in a premobile era, and it is struggling in mobile. People watch a lot of YouTube videos, but not through the YouTube app or by going to YouTube.com. They bump into them via Facebook or other social media. Wall Street Journal reporter Rolfe Winkler says YouTube still is not profitable, and it is generating just $4 billion per year in revenue.

Facebook executives see YouTube's weakness in mobile and are working very hard to capitalize. One of the company's biggest pushes in 2015 is to bring more video to its platform and stick ads in front of it. Facebook no doubt is going to make a lot of money selling video ads. Its audience is huge, and it has been eating away at YouTube's share of videos viewed for a long time.

Facebook's advantages over YouTube are many, starting with the fact that 20 percent of the time people spend looking at their phones they are looking at the Facebook News Feed. But Facebook is weak in a few areas in which Snapchat is strong. One technical advantage: While a Snapchat video stops playing if the viewer stops holding a finger to the screen, a Facebook video in the News Feed is played automatically. 

One more meaningful advantage: Facebook has no video product that compares with Snapchat's Our Story. It has nothing so topical, so live, so huge. And, more frighteningly for Facebook executives, Our Story is just the beginning for Snapchat.

If you want to use jargon, the way to think about Snapchat is to think of it as a communications and consumption platform. If you hate jargon, think of it as a cable box for your phone. On that cable box, Snapchat's Our Story is the shows by the Snapchat channel. There are also other channels. Some of these channels are run by big media companies, including Vice, the Daily Mail, and CNN—each of which put out daily stories on a screen Snapchat calls Discover.

Other channels are made up of shows produced by independent creators. There is a small but growing group of Snapchat celebrities who produce daily stories for huge audiences of “friends” on the service. The New Yorker recently profiled one of those stars, Jérôme Jarre. The New York Times' Nick Bilton wrote a column about another, Casey Neistat. Neistat, who has 480,000 followers on YouTube, says the engagement he gets on Snapchat is unlike anything he has ever seen and that the service is the future of social media.