Born in 2011, Snapchat is undoubtedly an application that proved to be very innovative at the time. But unfortunately, it has suffered a decline in recent years. But why did this happen? There’s an explanation for this.

Being such a revolutionary app in its time, it causes intrigue to know what’s the reason for its slow but imminent descent. Today we’re going to analyze the matter.

Snapchat and its business model

Before covering this topic, it’s important to explain what Snapchat makes the app it is. What differentiates it from other social networks in the market is the transience of its messages. All content published on this social network is short-lived and will be automatically deleted after a certain time. Forever.

The rarity about its way of functioning has raised more than one eyebrow. Being a platform where ephemeral messages are shared, its concept surprised many people. However, it became very famous in the United States, especially among teenagers. A market niche that Snap Inc., the company that made the app, has exploited.

How does Snapchat earn money then? Through Snap Ads, Geofilters, the Discover option, the Sponsored Lens Filters and partnerships with sports organizations. All this is summarized in fleeting but effective advertising, the implementation of functions for the Snapchat camera, strategic alliances and advertising revenues.

This should more or less clear things on how this app manages to earn revenue. However, what has gone wrong in this business model and why it has caused problems to Snapchat?

The regrettable falling of Snapchat

Let’s agree that Snapchat went from earning 58.6 million dollars a year in 2015 to 825 million dollars a year for 2017. And on March 3 of that year, it entered the New York Stock Exchange. Where their shares started with a value of $17 per share and later $24.

We have to recall that this social network has strong competition: giants like Facebook, Instagram and WhatsApp. Who seem to be doing everything possible to lash out at Snapchat. Which on multiple occasions, refused to be bought by Facebook. Maybe that’s why this social network, WhatsApp and Instagram have copied many of the features offered by Snapchat.

Snapchat vs Instagram
The number of worldwide daily active users on Snapchat, compared with that of Instagram Stories since its launch. Note that Snapchat didn’t reveal how many active users there are since January 2017, but that Instagram Stories already exceeds 200,000. Source: forbes.com

This action affected Snapchat considerably. Due to the great power and resonance that Facebook (which is also owner of Instagram and WhatsApp) they managed to make many people lose interest in this social network.

Not to mention the losses that they’ve had on the New York Stock Exchange, all because of what we said before. This puts Snapchat in a dangerous situation, whose business model seems to inspire less confidence each day to its investors.

Its other setbacks

By now, it should be clear what’s the main reason on why Snapchat has suffered a lot in recent years. However, as if that weren’t enough, the social network founded by Evan Spiegel has suffered other misfortunes that seem to bring it closer to a possible end.

Things got worse at the end of 2016 when they announced the Spectacles, smartglasses that could take photos and record videos. They were a sensation during their time. But several months later, some media outlets reported that despite this, the company still had hundreds of thousands of units that weren’t sold.

Snapchat Snaptacles
The Spectacles, a product of Snap, Inc. Which could only be obtained at the beginning in certain dispensing machines in the United States. Source: CNET

Another prominent one, was in early 2018. The model and Internet personality Kylie Jenner, made a tweet that became very famous where she hinted that Snapchat was boring for her. It caused, according to reports, that they lost $1.3 million in revenue and many customers who uninstalled the app because of it.

This was followed by another, more recent scandal, which occurred in March 2017. Snapchat was criticized for using an advertisement that mocked the domestic violence suffered by the singer Rihanna in 2009. By her ex-boyfriend Chris Brown. The worst happened when she lashed out at them on Instagram, which apparently caused their stock to lose value in the stock market.

Snapchat Rihanna Chris Brown
The advertisement that alluded to the domestic violence suffered by the singer Rihanna. It is thought that Snap, Inc. published it intentionally but they denied it, claiming it was a mistake. Source: Twitter

With this it’s possible to reach the conclusion that Snapchat has had problems in consolidating its business model. Their poor and overestimated marketing tactics, according to the experts, are what have brought the calamities that have befallen them.

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Can Snapchat recover and save its business model…?