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Thoughts on Snapchat spurning $3 & $4 Billion Offer, Instagram Direct, and Facebook Video Ads leak

Lots of news in the social space but I’ll focus on Facebook taking up the bulk of the headlines these days.  As you’ve probably heard, Snapchat turned down two acquisitions offers. One from Facebook for $3 billion dollars and another rumored offer for $4 billion.

I think Snapchat made the mistake of turning down the two offers because unlike Instagram, they don’t have a marketing platform for brands to pay to use (plus the offer was all cash!). Yes, I know brands like Taco Bell are being creative with the way they target teens but it’s not a platform every brand can use. That’s the biggest issue for any social platform – getting brands to create compelling content and maintain long-term engagement with those users. Snapchat just doesn’t have that right now and if they were to ever implement a paid strategy, it will have to something much different than their current iteration of their ephemeral product.  I wont’ even go into how fickle the 13-25 year old group is.  If Snapchat releases an ad product that disrupts users, you can bet they’ll leave in a heartbeat.

In Snapchat’s defense, it’s hard to sell when you’re the hottest platform in the social space but they need to be realistic on their potential.   They did hire Emily White, who was responsible for Instagram’s recent ad product (which wasn’t that difficult to come up with. I mean it’s an image-based platform, so brands will obviously share images. The greater success was not getting too much negative feedback on the ads.), so maybe she can come up with something for Snapchat.

So what does Facebook do once they get spurned? They come out with a competing product. They tried this against Snapchat in the past with Poke, which was a massive failure.  But this time they rolled it out on Instagram called Instagram Direct, which I think may end up hurting them in the long run. As I said on Twitter, turning Instagram into a messaging platform will further push younger users away from FB. We know they’re already making the move, so this is just another step in that direction.

Instagram Direct isn’t exactly a competing product against Snapchat. Messages don’t disappear and it still lacks some features but it shows how important messaging is becoming to Facebook.  And it’s also clear what their strategy looks like against competitors, get acquired or face the wrath of Facebook’s size (which may not mean much if users don’t move over). 

The final Facebook news this week was the leaked presentation about their upcoming video ads.  While I predicted something like this coming to Instagram (some variation of this already exist if you share Instagram videos on FB, the mobile version of the News Feed auto-plays Instagram videos), this leaked presentation confirms that it’s on the way on Facebook.  Users will get the videos in the News Feed but sound will be turned off so it’s not distracting users as they scroll through the feed.  I think Facebook will make a ton of money from video ads but they may also lose users in the process. Its one thing to ignore sponsored posts with images but a video will push users off the platform even more. Again, that’s just my perspective but I have been right in the past.

 

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Pinterest ads are coming soon. Users are hoping they’re not distracting

Pinterest has announced they’ll include ads on their website. It was an inevitable move for them, as affiliate marketing wasn’t generating the kind of revenue they were hoping for. One of the benefits of Pinterest was that it allowed users to be aspirational, from vacations, homes to clothes.  If majority of those users are aspirational then they may never buy anything. Many women on the site use it as a platform to build boards to showcase things they’d like, only to buy it directly via another site. That’s not really any fault of Pinterest’s. Without a viable revenue stream, they need to do something.

Ads aren’t a big deal if they make it unobtrusive, which sounds like they want to.  There’s an opportunity for them to use a Facebook News Feed-like approach to sharing paid ads. There’s also the opportunity to help brands grow their presences via paid media. Some brands have been knocking on the door to get paid media within Pinterest but haven’t had the opportunity due to it’s own limitations. Now, they’ll probably get a chance to work hand in hand with them.

My biggest concern is if the ads become a nuisance then you can expect a drop in users, which already seems to be the case reported in this Techcrunch article. Sites like Pinterest can be a hot thing one day and then disappear the next. Just look at how fast they became popular even though they had been around for years. I hope Pinterest sticks around. Even though I’m not a heavy user, I do appreciate the site’s ability to provide insights into potential buying habits. I also love the long tail impact of Pinterest over Facebook, which requires fresh content on a regular basis. I strongly believe marketers have just scraped the surface on Pinterest. Its narrow focus on categories and topics makes it difficult for verticals such as finance and CPG but I believe in its long term potential.

I’ll follow up this article with Pinterest’s impact on brands and marketers. How can they take advantage of the platform and what are some things brands should do to prepare for the inevitable influx of ads, even competing ads.

Do you think Pinterest can pull off a viable ad platform with end users in mind?

 

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