By Adam Fraser
Snapchat continues to experience a bumpy ride as a listed company.
As I previously wrote, it disappointed the market with its first quarterly results as a listed company. This pattern continued as it delivered its second set of quarterly numbers – the already troubled share price fell a further 17% and now sits well below the initial IPO price.
If you want to dive into the details, you can check the detailed financials, investor presentation and press release around the quarterly numbers. If you want a quick summary, the 10 key takeaways from the Q2 2017 results are below:
- Daily Active Users (DAUs) grew to 173m from 166m in the prior quarter (4% growth) and 143m a year ago (21% growth).
- Average revenue per user was US$1.05 compared to $0.90 in the last quarter and $0.50 a year ago – this is well below the levels achieved by Facebook.
- Revenue for the quarter was US$182m compared to $150m last quarter and $72m a year ago.
- The user and revenue growth was under the level expected by the market, leading to the negative response in the share price.
- Net loss was $443m for the quarter, compared to a massive US$2.2bn in the prior quarter – note this figure was inflated by the expense associated with stock issues related to the IPO.
- Instagram stories reported in the latest Facebook announcement, that it had 250m users, showing the extent to which Instagram is successfully taking Snapchat head on via imitation of its key features.
- USA DAUs were 75m, representing 43% of global users, a ratio that has been broadly consistent for the past 12 months
- The USA, however, drove 81% of global revenues, showing the more rapid advertiser adoption in the company’s home location compared to the rest of the globe.
- Capital expenditure for the quarter was $19m, broadly consistent with the past 12m when the quarterly amount has varied between $16m and $20m.
- Adjusted EBITDA (removing the impact of stock based compensation) was a loss of US$194m for the quarter, the highest quarterly loss in the period reported (which went back to Q2 2016).
Snapchat is learning what Twitter has learned over recent years – analysts will focus obsessively on short term user growth almost to the exclusion of every other metric, making long term strategic planning a challenge to execute in a listed company environment.
Still valued at US$15bn whilst significantly loss making, Snap Inc is learning that when investors price perfection, even small disappointments will lead to the harshest of share price responses.
Snapchat is growing its user and revenue base. But its losses are also growing. And the glare of the public markets can be an uncomfortable environment to innovate, evolve and pivot whilst also attempting to drive profitability.
Snapchat has by no means completely lost its luster and its loyal, engaged millennial audience remains highly attractive to marketers. However competition from Facebook and Instagram is fierce, and much of its IP has been easily imitated. The road ahead does not look to be an easy one as Snapchat attempts to justify what remains a massive valuation relative to its actual financial performance.
By Adam Fraser
Twitter has delivered its Q2 2017 results, and the green shoots of hope evident last quarter seem to have disappeared pretty quickly.
Whilst the financial results have always been weak, most significantly, monthly user numbers plateaued after increasing by an encouraging 9m users in the prior quarter. The market didn’t like what it saw, however, with the share price declining by around 13% on release of the results.
If you want to dive into all of the detail, you can check the financials, investor presentation, shareholder letter and investor conference call. If you want the key highlights here are 10 key takeaways:
- Monthly active user (MAU) numbers were stable at 328m in line with the last quarter and 313m a year ago (5.3% growth); this is the biggest concern for analysts. Despite the President of the USA using Twitter as his primary means of communication,
- 21% of Twitter’s MAUs (68m) are based in the USA; this is an increase from 67m in the prior quarter, noting most of the user growth is coming internationally
- Attempts to drive greater engagement and more regular usage on the platform are working, with Daily Active Users growing at 12% on prior year v 14% last quarter and 7% in Q3 (interestingly the company does not reveal the absolute number of DAUs and actively refused again to release this in the face of formal queries).
- Total ad engagements increased 95% year-over-year, driven by a continuing mix shift toward video ad impressions as well as higher click-through rates, as a result of better targeting and ad relevance
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted it had continued to make meaningful progress in this area. now taking action on 10X the number of abusive accounts every day compared to the same time last year. This very important.
- Revenue at $573m was up 4.6% from the prior quarter of US$548m and, more significantly, 4.8% lower than a year ago when ad revenue was $602m. The revenue trends are not convincing
- The breakdown of revenue for the quarter showed 85% of revenue coming from advertising and 15% (versus 14% in the prior quarter) coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter).
- Twitter made a loss of US116m for the quarter but also discloses “adjusted EBITDA which showed a profit of US$178m after adjusting for stock based compensation, depreciation and amortisation Twitter ended the quarter with US$4.1bn in cash so despite the regular “Twitter is dying” headlines we see, the business is solidly funded.
- Live video remains a key focus. In Q2 Twitter announced approximately 40 live-streaming partnerships, including two 24×7 networks and 10 international deals, extending their total live streaming content deals to well over 200 premium content partners across Live video and Amplify
- Video remained Twitter’s largest and fastest-growing ad format in Q2, reflecting strength in their First View ad format and in pre roll and mid-roll In-Stream Video Ads. Twitter also made a very strong debut at the 2017 Digital Content NewFronts
Jack Dorsey, Twitter’s CEO said “We’re strengthening our execution, which gives us confidence that our product improvements will continue to contribute to meaningful increases in daily active usage. We’re also encouraged by the progress we’re making executing against our top revenue generating priorities as we focus on making Twitter the best place to see and share what’s happening, where you can see every side and perspective.”
Jack has had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. The absence of monthly user growth is the key negative (especially in the context of the massive earned media from the US President’s ongoing use), whilst of course large, continuing quarterly losses. Whether Twitter can convert its undoubted public utility and societal importance into a viable profitable business still remains to be seen.
By Adam Fraser
That new Snapchat feature, Instagram’s latest ad product, Twitter’s user numbers last quarter. Etc Etc. The media focus in the marketing space seems to be dominated by short term results and current tactics.
It can be hard to see the wood for the trees and elevate to see longer term trends and strategic perspectives.
Hence I really enjoyed the recent Medium blog post from Bob Knorpp on “The Fallacy of Digital Marketing as a Discipline”. It’s a reasonably short piece (unlike the excellent long form Doc Searle’s article on AdTech that I also recently recommended), but it is thoughtful and insightful around the challenges digital marketing faces, and the reasons why these have transpired over the past 2 decades. My favourite line (I am sure with programmatic in mind) is; “we’ve traded in meaningful interactions for nuclear-bomb levels of reach and frequency.”
One of Bob’s points on why digital has failed affirms a key thread in my recent podcast with Jason Kint of Digital Content Next – in the world of digital marketing we seem to have gravitated to a direct marketing flashing neon Vegas style “buy now” approach and forgotten about the brand building techniques used in more traditional media like TV, radio, print and outdoor. As Bob says; “marquee brands have been conditioned to treat digital as they used to treat coupon circulars, buying as a commodity, rather than as a considered brand-building choice on the now-dominant media.”
In the chaos and rapid change of social, digital and martech, a great 5 minute read to elevate up and consider longer term trends and the strategic landscape.
By Adam Fraser
The University of Canberra News and Media Research Centre recently released the third in their series of Digital News Reports.
The Digital News Report: Australia 2017 provides insights into what Australians think about news brands, and how and why we consume news. The online survey was conducted in Australia in early 2017 based on a sample size of 2,004 adults who access news once a month or more.
Some of the key findings were:
- 56 per cent of adult Australians try to avoid the news occasionally or often. The main reasons provided by news avoiders were: that news can have a negative effect on mood; news can’t be relied upon to be true; and/or avoiders didn’t feel that there is anything they can do about news stories.
- Interest in news remains strong with about 63% of participants saying they were extremely or very interested in news (consistent with 2016).
- 39% of respondents use Facebook to get news, with 15% using YouTube. But 41% of respondents said they didn’t use any of the social media brands listed in our survey for news consumption.
- Australians tend to trust the news they consume (48%) more so than they trust news in general (42%). There are a large number of people who neither trust nor distrust the news they use (33%).
- More men are consuming online news while in the bathroom or toilet than women accessing news sites at work. Men prefer to share news articles via email, whereas women prefer social media or sharing face-to-face.
- TV news continues to be the main source of news for Australian audiences overall. But the preference for the main source varies across age groups:
- 38% of 18-24 year olds use social
- 32% of 25-34 year olds use online
- 45% of 55-64 year olds and 50% of 65+ year olds use TV.
As a benchmark, previous studies in the USA have indicated 40% of Americans access news via digital means.
This is an extremely comprehensive report, containing not just in depth analytics on a range of aspects related to the media sector, but also quality commentary from multiple industry experts (including some global contributors).
Highly recommended reading and a great source of reference data.
By Adam Fraser
The Sensis Social Media Report for 2017 has been released. It’s a report I look forward to as – as I have previously discussed in 2016 and 2015 – there are lots of stats about global social media usage, but limited stats specific to Australia.
Sensis surveys 800 consumers and 1100 businesses in Australia about their social media usage across a broad range of metrics; the final reports are comprehensive, this year split into separate reports for the findings on consumers and businesses.
There are stats and insights aplenty from the report, but here are 12 highlights for those without the time to read all 56 pages of the whole document:
- Almost eight out of ten of Australians are now on social media. Penetration is up 10% to 79% (from 69% in 2016) of Australians, an incredible growth rate when many would possibly assess social as having hit maturity.
- The age splits are fascinating, with social almost universal amongst 18-29 year olds (99% penetration) compared to 40-49 year olds (86%) and 65+ (47%).
- A new question this year showed the growing importance of messaging platforms, with 88% of social media users also using messaging; Facebook Messenger was the dominant platform of choice with 81% of users; surprisingly WhatsApp penetrated only 18%.
- Mobiles are the most popular device (81% own v 76% last year), having eclipsed laptops (59% own v 70% last year) – accordingly, social networks are most often accessed via a mobile device (81%) versus a laptop (30%) and tablet (25%).
- 59% of social media users check social networks daily (up from 50% last year), with 35% (up from 26% last year) checking in more than 5 times per day.
- Facebook is by far the most popular social network with 94% of users accessing it; by comparison penetration for Instagram is 46% (up from 31% last year), Snapchat 40% (up from 22%), Twitter 32% (up from 19%) and LinkedIn 18% (down from 24%) .The growth in Twitter and the decline in Linkedin were notable.
- Snapchat users are the most frequent users of any platform (41.7 times/week versus 25 times/week for Facebook); next ranked are Twitter (39.6 times/week) and Instagram (37.7 times/week)
- The average number of friends/contacts on each of the platforms is Facebook (234), Twitter (260), Instagram (258), LinkedIn (199), Google Plus (59) and Snapchat (53) – an average total of 469 across all 6 platforms (increase vs 409 last year).
- 68% of mobile users access social networks via an app only compared to only 9% using a website only (23% use both).
- 35% of users are on social media while watching TV, with the 40-49 year old demographic the most likely to do this and 18-29 year olds the least likely.
- The primary reason (by some distance) people are on social media is to “catch up with family and friends” (89%) – something brands always need to remember! – with sharing photos/videos (57%) and watching videos (43%) the next most common reasons.
- 16% of users use social media to research a product prior to purchase – the most popular products researched were electrical goods, furniture and clothing/fashion.
A hugely comprehensive piece of research on the Australian social media landscape, and having prepared the research since 2012, a good indicator of trends over time. Well worth a read and a great reference doc.
Kurt Sanders enjoyed the recent episode with Mark Ritson. Thank you for the listen and share, Kurt!
By Adam Fraser
Google’s business model is built on advertising revenue. Lots of it. Almost $80bn in 2016. It dominates, along with Facebook, to the point it is accused regularly of being in a digital duopoly in the online advertising sector.
Stats vary, but $14bn of the $19bn spent on digital advertising in Q1 2017 in the USA went to Google and Facebook, and the two companies alone account for 80+% of the growth in the digital media sector.
So weaned as it is on advertising revenue, a headline reader may be somewhat confused as to why Google would introduce its own ad blocker into its very popular web browser Chrome.
In the ad blocking game, the cat and mouse, cops and robbers battle between publishers trying to show you ads on every inch of digital real estate, and the ad blockers trying to stop them, is an arms race in which it can sometimes be hard to decipher the good guys from the bad. One thing is for sure – consumers are “voting with their feet” and ad blocking is growing at an incredible rate.
Google’s motives could be argued to be pure – insert your own description of “enhancing the customer experience”, “removing annoying and intrusive ads” or “encouraging good quality ads which users want to see”. But there is a small elephant in the room – Google will let its own ads through. Some describe the “Coalition for better ads” which Google has joined (along with Facebook) as a “cartel orchestrated by Google”
Protecting the consumer from bad media experiences or holding other publishers and advertising brands to ransom? Meet the standards that we Google deem acceptable – if not, take your chances on our ad blocker filtering them out. In George Orwell ‘Animal Farm’ terms, all ads are equal, some are just more equal than others.
As the owner of both the most popular access point to the web (Chrome browser) and the largest recipient of digital ad dollars on the web, Google (along with Facebook) wields an enormous amount of power. The jury is out on this move, but a world in which two companies control pretty much everything we see on the web seems to be looming large.
You can listen to the podcast here.
By Adam Fraser
I am a big fan of the research produced by Edison Research and have previously written on their regular Infinite Dial report into media and podcasting trends.
Edison recently released a very interesting piece of research into social media usage on mobile in a new stand-alone report “Social Sharing in the Mobile World”.
The study of 1571 US smartphone owners aged 18-54 revealed some key insights into the mobile use of social media, including:
- 80% of American smartphone owners use social media apps every day
- The average smartphone owner uses 14 types of apps
- 70% of smartphone owners who use social media say they use Facebook every day
- More than six in ten Facebook users say they belong to local Facebook groups or other online local groups
- Nearly a quarter (23%) of Facebook users say they have broadcast a Facebook live video
Some other interesting insights include:
- Android users (59%) eclipsed Apple users (45%)
- 87% use text messaging daily
- 92% of respondents used Facebook on their smartphone, versus 57% Instagram, 43% Twitter and 40% Snapchat
- 80% of users share photos at least once per month, while 54% of users take at least one selfie per month
- The top messenger apps used were (in order of popularity) Facebook Messenger, Skype, WhatsApp and (surprisingly) Google Hangouts
An interesting set of data points, and a useful, credible source for research references. Worth checking out.
(Looking forward to having Tom Webster from Edison on a future EchoJunction podcast)
By Adam Fraser
It’s that time of the year again. LinkedIn and Twitter shares come at every angle as one of the tech industry’s most eagerly awaited powerpoint decks – the 2017 Internet trends report from Mary Meeker – is released.
At 355 slides (no typo – three hundred and fifty-five…) it is a deep dive into a number of uber internet trends. It’s not for the faint hearted looking for a quick sound bite and headline – think more encyclopedia than break through analysis – but it truly is a fantastic (free) resource for anyone performing analysis in the tech sector.
I would encourage everyone to take the time to review the detailed deck, but if you don’t have the time here are 10 key takeaways:
- Global internet users continue to grow (now 3.4bn), with the rate of growth flat on prior year at 10%; global internet users have more than doubled since 2009
- Growth in global smartphone shipments slowed significantly to 3%, from 28% growth in 2014 and 10% growth in 2015; this suggests smartphone penetration is approaching maturity (2.8bn users)
- The time spent with digital media per adult in the USA continued its steady consistent growth over recent years, up 4% to 5.6 hours/day (as comparison this was 4.3 hours/day in 2012 and 3.0 hours/day in 2009) with the majority of this time now spent on a mobile device
- Voice was identified as an increasingly important means of communicating with devices, with 20% of mobile searches on Google now made via Voice and Google’s machine learning voice accuracy now exceeding 95%; in addition, the Amazon Echo install base in the USA now exceeds 10m.
- Social customer service (“easier access to online support channels”) was identified by 60% of survey respondents to be an area brands could most improve their customer service offering
- Internet advertising in the USA grew to $73bn in 2016 from $60bn in 2015 and $50bn in 2014, driven by mobile and largely Facebook and Google (these two companies comprised 85% of internet advertising growth); mobile advertising now exceeds desktop advertising
- Print spend is overweight and mobile advertising spend underweight vs proportion of consumer time spent on media platforms; Print (4% time spent, 12% ad spend), Radio (9% time spent, 9% ad spend), TV (38% time spent, 38% ad spend), Internet (20% time spent, 20% ad spend), Mobile (28% time spent, 21% ad spend); based on current trends digital advertising spend will exceed TV ad spend in 2017
- Ad blocking is growing at an exponential rate, with almost 250m desktop ad blocking users, and approaching 400m mobile ad blocking users.
- Online retail sales in the USA hit almost $400bn, growing 15% on the prior year. Walmart – the world’s largest retailer – is aggressively growing its online channel and Amazon is now becoming a force in own brand products for basic categories such as batteries (market leading 31% share of market) and baby wipes (16% share of the market)
- The market cap of the top 20 tech companies globally is 3.8 trillion dollars; tech companies represent 40% of the world’s top 20 most valuable companies, and 100% of the top 5 (Apple, Google, Microsoft, Amazon, Facebook)
Other sections of the report covered healthcare, gaming, the Cloud, China, and India in some detail.
There are many more fascinating insights in the report; well worth the time for a full review, and an excellent reference point for reliable and trustworthy data points that may be useful in a range of other content analytics use cases.