Snapchat Discover, the section of the social networking app where brands (such as the Daily Mail and Cosmopolitan) can post short stories and videos, is not performing as well as the company thought it would, we’ve learned exclusively from sources close to the matter.
Earlier this week, The Information‘s Tom Dotan reported that traffic to Discover has been steadily declining, ever since the service launched four months ago.
While viewership to Discover channels was significant in the first few days after the portal’s Jan. 27 launch, it has dropped an average of 30 percent to 50 percent since then, according to two people who’ve seen the traffic data. One media firm with a channel on Discover saw its unique views drop from one million to around 700,000 and is trending downward, according to a person close to the media company.
The repercussions of this decline in traffic could be huge for Snapchat. Snapchat, which is currently valued at $15 billion, has been plagued with the age-old problem facing social media networks since day one: how is it going to monetize and bring in revenue, without being annoying and antagonizing its current user base?
Discover was Snapchat’s answer to that question. With Discover, Snapchat set the price at $100 CPM (cost per 1000 ads shown), which was twice as much as most video ad products can command online, and way more than what publishers can command for banner ads.
For a while, every thing seemed great for Snapchat.
Discover was even hailed as “the biggest thing in news since Twitter.”
But soon enough, the buzz wore off.
Upon seeing a steady decline in views to Discover, Snapchat began an internal investigation into what was going on, specifically focusing on the users’ behavior within the app. The investigation found that most people never went back to the Discover section more than twice (ever since the service launched), and the times they did, they left within a few seconds, often without interacting with the content in the section.
The conclusion Snapchat arrived to was troubling: Discover was facing a user-retention problem, and more importantly, people were not satisfied with the product – most of its traffic had come from accidental swipes and touches.
While the content lineup can be tweaked once the current contract with Snapchat’s media partners expire this June, Snapchat is also looking to revamp the layout of Discover, we’re told by sources with knowledge of the company’s roadmap.
Snapchat is currently looking at a few apps with proven track records of retaining users to inspire its redesign of Discover – one of them being BuzzFeed’s app. We’re also told that the company may switch to a vertical, scrolling layout for its next iteration of Discover, thus ditching its current “button” based layout where users have to specifically pick a media company’s button to view its content.
Snapchat’s competitive product offering to Square’s Cash, Snapcash, is also struggling to gain traction amongst the app’s mostly millennial demographic. With Snapcash, users can securely send money to one another just by typing a $ into the text field and pressing the green button. While the product launched to huge media fanfare, it has since languished according to data viewed by a source.
At a $15 billion valuation, Snapchat is under tremendous pressure to prove itself to investors that it can generate revenue. If it succeeds, the company has the potential to be the next Facebook, at half the amount of time it took Facebook. If it fails, it may very well become the next Twitter.