donít use email any more. Facebook is for Mom and Dad.
And Yik Yak is so 2015.
it comes to communication in 2017, Snapchat is where itís
Inc.ís ability to court a young demographic with its
ephemeral photo and video messaging app Snapchat has
been one of its defining characteristics and the pillar
of its success. But as the company prepares for its
stock market debut, its reliance on users under the age
of 25 could also be one of its biggest liabilities.
the rocks many ships have crashed on," said Erik
Gordon, a professor at the University of Michiganís
Ross School of Business, who has studied companies that
staked their success on the loyalty of young customers.
of all the teen retailers that were fabulously
successful five to 10 years ago that are now in terrible
shape. Look at Abercrombie and Fitch," Gordon said.
"(Young people) are not as loyal as they move on.
As they start to get older, they donít want to do what
they did as kids."
Snap Inc. knows this. In its S-1 ó a form that
companies planning to go public file with the SEC ó
the company pinpointed as a risk the fact that the
majority of its users are between 18 and 34 years old, a
demographic that "may be less brand loyal and more
likely to follow trends than other demographics."
Snapchat usage appears to taper with age. Users younger
than 25 opened the app more than 20 times a day and
spent more than 30 minutes viewing photos and video.
Users older than 25 visited Snapchat about 12 times a
day and spent a total of 20 minutes in the app.
the company succeeds in the long term or falls on the
sword of youthful disloyalty will depend on whether it
is touched by the "age effect" or the
"cohort effect," Gordon said.
the former, broad swaths of Snapchat users would lose
interest when they reach a certain age.
would be like cheap beer," Gordon said. "I
live in a college town, and the best-selling beers are
cheap beers. But when these students graduate and they
have income, they switch. Theyíre no longer drinking
whatís on special."
latter ó and more desirable of the two ó is the
cohort effect, in which people stick with a product or
service theyíve grown up with because it has become a
cohort and generation chooses what works for them, and
then they stick with it," said Chi-Hua Chien, a
partner at Goodwater Capital who led early investments
in Facebook and Twitter. "People in their 40s use
email, people in their 30s use text and Facebook, people
in their 20s use Snapchat. People in their 40s arenít
going to suddenly start abandoning email because
something else has come along."
thatís what Snap Inc is banking on. Its S-1 is
littered with references to "retention, growth, and
engagement" ó a sign that it understands the need
to hang on to todayís teens and millennials if it
doesnít want to go the way of other flash-in-the pan
even just hanging onto its current audience could be
risky, said Adam Brasel, associate professor and
chairman of Boston Collegeís marketing department. He
said Snapchat faces a similar risk to many social
networks: its mass popularity with current millennials
might work against it in the next generation, much like
how Facebook is not as popular with teens.
some degree, Snapchat is so popular right now with
millennials that as millennials age, the generation thatís
coming up behind (them) may view Snapchat as not for
them," Brasel said. "If it truly becomes this
generational thing, they run this risk of being tied to
the generation, rather than the age group. And that can
be very risky."
popularity has already evolved from its initial appeal
as a way to send disappearing messages. It now
captivates users with a plethora of filters for photos
and videos, and exclusive articles published by a select
group of media companies. The trick, Brasel says, is to
figure out what the next hook will be.
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are a number of brands that have aggressively marketed
sub-brands to millennials, like Toyota Motor Corp.ís
Scion brand, which was aimed at a younger demographic of
car buyers that might not have otherwise been interested
in Toyota vehicles. Last year, Toyota ended that brand.
A majority of the market that found Scion attractive had
aged up into the general Toyota market, Brasel said.
was also smart in realizing the brand had done what it
needed to do and kind of shuttered the brand before it
began to gain negative equity," he said.
analysts believe that Snap might have the chops to pull
a Toyota, hanging onto its current users while also
appealing to tomorrowís tweens and teens.
do that theyíll need to innovate, and we can see that
Snapchat has already been able to hit a nerve several
times," said Robert Lang, chief executive of social
media analytics firm Socialbakers.
noted that many of Snapchatís features have been such
a hit with young users and advertisers that companies
such as Instagram have added strikingly similar features
to their own products.
can see that Snapchat is able to engage users at a very
high level and at a very young age ó that is something
nobody has managed to do," he said.
Pachter, a research analyst at Wedbush Securities, is
similarly confident in Snapís ability to pull it off.
Heís seen Snapchatís appeal firsthand through his
teenage children. He said they visit the app up to 18
times an hour.
my kids are 25, 35, or 45, they will still be using
it," Pachter said. "So I actually think it
might be built to last. Itís just the way my kids chat
with their friends."
donít think itís a fad," he said. "I think