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With Snapchats looming IPO the talk of both Wall Street and Silicon Valley, many analysts calculating about the companys long-term profitability should heed a new report from Fluent that casts doubt on Snapchats supposedly optimistic consumer perceptions.
Fluents Snapchat survey polled different demographics on how they felt about Snapchat as an application, usage rates and what they thought about using Snapchat in the far future. In light of the upcoming IPO and heated discussion about the companys valuation, the reports results could well presage some controversy come the end of Q1.
I see (younger cohorts) skipping ads as a user experience issue, in that advertising doesn't fit well or natively into the experience of Snapchatting, said Jordan Cohen, CMO of Fluent. Millennials aren't inherently adverse to advertising, they just want to be able to consume it on their own terms.
Perception of Snapchat
The fact that almost half of respondents claimed that they thought Snapchat is just a fad may be a product of sample size: 76 percent of respondents reported not being users of Snapchat, the majority of them belonging to older demographics. Sentiment among younger demographics, such as the under-34 crowd where uptake is dramatically higher was more optimistic about Snapchats long term viability.
66 percent of current Snapchat users reported that they expect to use the app five years from now, a sentiment that remained consistently high among age categories, meaning that consumers who begin using the app tend to subsequently have a high opinion of it.
However, when users were asked if they thought they would continue to use Snapchat in ten years time, the percentage who responded in the positive dropped to almost half, at 52 percent.
And 59 percent of the Gen Z bracket, who will be crucial to Snapchats long term success, responded that they do not think they will continue to use Snapchat after the age of 35. 50 percent of millennials, who are a little closer to the age in question, replied that they did not think they would use the app at that point, either.
A whopping 62 percent of Snapchat users expect a newer alternative to come out that they will switch to, bad news for a platform that 44 percent of users claim to always skip ads on. 50 percent of Gen Z users claimed to always skip ads, while 45 percent of millennials did, as well.
Taken in context with the IPO, the reports results could be an omen for analysts to heed when making suggestions to clients about investing.
However, a few key points to consider for those about to run away from buying: Individuals who actually use Snapchat have a high opinion of it; talk of another app replacing Snapchat is entirely speculative, and idealistic considering Snapchat has one of the most consumer-friendly user experiences; and Facebook has made investors a lot of money through acquisitions and ad product development, which Snapchat will have the funds to involve itself in once it goes public.
Being digitally savvy, Millennials and Gen Z expect and exert control over the entire online and mobile experiences, including whether they view, interact with or skip ads, Mr. Cohen said.