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Snapchat lets you take a photo of an object to buy it on Amazon
See, snap, sale. In a rare partnership for Amazon, the commerce giant will help Snapchat challenge Instagram and Pinterest for social shopping supremacy. Today Snapchat announced it’s slowly rolling out a new visual product search feature, confirming TechCrunch’s July scoop about this project, codenamed “Eagle.”
Users can use Snapchat’s camera to scan a physical object or barcode, which brings up a card showing that item and similar ones along with their title, price, thumbnail image, average review score and Prime availability. When they tap on one, they’ll be sent to Amazon’s app or site to buy it. Snapchat determines if you’re scanning a song, QR Snapcode or object, and then Amazon’s machine vision tech recognizes logos, artwork, package covers or other unique identifying marks to find the product. It’s rolling out to a small percentage of U.S. users first before Snap considers other countries.
Snap refused to disclose any financial terms of the partnership. It could be earning a referral fee for each thing you buy from Amazon, or it could just be doing the legwork for free in exchange for added utility. A Snapchat spokesperson tells me the latter is the motivation (without ruling out the former), as Snapchat wants its camera to become the new cursor — your point of interface between the real and digital worlds.
Social commerce is heating up as Instagram launches Shopping tags in Stories and a dedicated Shopping channel in Explore, while Pinterest opens up Shop the Look pins and hits 250 million monthly users. The feature should mesh well with Snap’s young and culture-obsessed audience. In the U.S., its users are 20 percent more likely to have made a mobile purchase than non-users, and 60 percent more likely to make impulse purchases according to studies by Murphy Research and GfK.
The feature functions similarly to Pinterest’s Lens visual search tool. In the video demo above, you can see Snapchat identifying Under Armour’s HOVR shoe (amongst all its other models), and the barcode for CoverGirl’s clean matte liquid makeup. That matches our scoop based on code dug out of Snapchat’s Android app by TechCrunch tipster Ishan Agarwal. Snapchat’s shares popped three percent the day we published that scoop, and again this morning before falling back to half that gain.
The feature could prove useful for when you don’t know the name of the product you’re looking at, as with shoes. That could turn visual search into a new form of word-of-mouth marketing where every time an owner shows off a product, they’re effectively erecting a billboard for it. Eventually, visual search could help users shop across language barriers.
Amazon is clearly warming up to social partnerships, recognizing its inadequacy in that department. Along with being named Snapchat’s official search partner, it’s also going to be bringing Alexa voice control to Facebook’s Portal video chat screen, which is reportedly debuting this week according to Cheddar’s Alex Heath.
Snapchat could use the help. It’s now losing users and money, down from 191 million to 188 million daily active users last quarter while burning $353 million. Partnering instead of trying to build all its technology in-house could help reduce that financial loss, while added utility could aid with user growth. And if Snap can convince advertisers, they might pay to educate people on how to scan their products with Snapchat.
Snap keeps saying it wants to be a “Camera Company,” but it’s really an augmented reality software layer through which to see the world. The question will be whether it can change our behavior so that when we see something special, we interact with it through the camera, not just capture it.
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Snapchat shares hit all-time low as search acquisition Vurb’s CEO bails
Snapchat’s sagging share price is making it tough to retain talent. Bobby Lo, founder and CEO of mobile search app Vurb that Snap Inc acquired for $114.5 million two years ago is leaving day-to-day operations at the company. That means Lo cut out early on his four-year retention package vesting schedule, which was likely influenced by Snapchat falling to new share price lows. Snap is trading around $9.15 today, compared to its $17 IPO price and $24 first-day close.
That’s down over 7 percent from yesterday following BTIG analyst Rich Greenfield gave Snap a sell rating with a target price of $5 saying “We are tired of Snapchat’s excuses for missing numbers and are no longer willing to give management ‘time’ to figure out monetization.” Greenfield is known as one of the top social network analysts, so people take him seriously when he says “We have been disappointed in SNAP’s product evolution (as have users) and see no reason to believe this will change.”
Vurb is a good example of this. The app let users make plans with friends to visit local places, allowing them to bundle restaurants, movie theaters, and more into shareable decks of search cards. It took over a year after the October 2016 acquisition for the tech to be integrated into Snapchat in the form of context cards in search. But Snap never seemed to figure out how to make its content-craving teen audience care about Vurb’s utility. Snap could have built powerful offline meetup tools out of the cards but never did, and lackluster Snap Map adoption furthered clouded the company’s path forward around local businesses.
Now Lo tells TechCrunch of his departure, “Building experiences at Snap has been a wonderful culmination of my seven-year startup journey with Vurb. My transition to an advisor at Snap lets me continue supporting the amazing people there while directing my time back into startups, starting with investing and advising in founders.”
Lo was early to embrace the monolithic app style pioneered by WeChat in China that’s become increasingly influential in the states. Snap confirmed the departure while trying to downplay it. A spokesperson tells me, “Bobby transitioned to an advisory role this summer, and we appreciate his continued contributions to Snap.”
Given Snap is known to back-weight its stock vesting schedules, Lo could be leaving over half of his retention shares on the table. That decision should worry investors. As a solo founder, Lo already made off with a big chunk of the acquisition price that including $21 million in cash and $83 million in stock, so with the company’s share price so low, he might have had little incentive to stay.
Snapchat Context Cards built from Vurb’s acquired technology
Since last July, Snap has lost a ton of talent including SVP of Engineering Tim Sehn, early employee Chloe Drimal, VP of HR and Legal Robyn Thomas and VP of Securities and Facilities Martin Lev, CFO Drew Vollero, VP of product Tom Conrad, TimeHop co-founder Jonathan Wegener, Spectacles team lead Mark Randall, ad tech manager Sriram Krishnan, head of sales Jeff Lucas, and just last week, its COO Imran Khan.
With its user count shrinking, constant competition from Facebook and Instagram, and talent fleeing, it’s hard to see a bright future for Snap. Unless CEO Evan Spiegel, without the help of his departed lieutenants, can come up with a groundbreaking new product that’s not easy to copy, we could be looking at downward spiral for the ephemeral app. At what point must Snap consider selling itself to Google, Apple, Tencent, Disney, or whoever will take on the distressed social network?
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Snapchat adds new styles as Spectacles V2s get used 40% more than V1
Snapchat isn’t revealing sales numbers of version 2 of its Spectacles camera sunglasses, but at least they’re not getting left in a drawer as much as the V1s. The company tells me V2 owners are capturing 40 percent more Snaps than people with V1s.
And today, Snapchat is launching two new black-rimmed hipster styles of Spectacles V2 — a Wayfarer-esque Nico model and a glamorous big-lensed Veronica model. Both come with a slimmer semi-soft black carrying case instead of the chunky old triangular yellow one, and are polarized for the first time. They look a lot more like normal sunglasses, compared to the jokey, bubbly V1s, so they could appeal to a more mature and fashionable audience. They go on sale today for $199 in the US and Europe and will be sold in Neiman Marcus and Nordstrom later this year, while the old styles remain $149.
The new Spectacles styles (from left): Veronica and Nico
Spectacles V2 original style (left) and V1 (right)
Snap is also trying to get users to actually post what they capture, so it’s planning an automatically curated Highlight Story feature that will help you turn your best Specs content into great things to share. That could address the problem common amongst GoPro users of shooting a ton of cool footage but never editing it for display.
The problem is that V1 were pretty exceedingly unpopular, and those that did buy them. Snap only shipped 220,000 pairs and reportedly had hundreds of thousands more gathering dust in a warehouse. It took a $40 million write-off and its hardware “camera company” strategy was called into question. Business Insider reported that less than 50 percent of buyers kept using them after a month and a “sizeable” percentage stopped after just a week.
The new styles come with a slimmer semi-soft carry case
That means the bar was pretty low from which to score a 40 percent increase in usage, especially given the V2s take photos, work underwater, come in a slimmer charging case, and lack the V1s’ bright yellow ring around the camera lens that announces you’re wearing a mini computer on your face. Snap was smart to finally let you export in non-circular formats which are useful for sharing beyond Snapchat, and let you automatically save Snaps to your camera roll and not just its app’s Memories feature.
I’ve certainly been using my V2s much more than the V1s since they’re more discrete and versatile. And I haven’t encountered as much fear or anxiety from people worried about being filmed as privacy norms around technology continue to relax.
But even with the improved hardware, new styles, and upcoming features, Spectacles V2 don’t look like they’re moving the needle for Snapchat. After shrinking in user count last quarter, Snap’s share price has fallen to just a few cents above its all-time low. Given most of its users are cash-strapped teens who aren’t going to buy Spectacles even if they’re cool, the company needs to focus on how to make its app for everyone more useful and differentiated after the invasion of Instagram’s copy-cats of its Stories and ephemeral messaging.
Whether that means securing tentpole premium video content for Discover, redesigning Stories to ditch the interstitials for better lean-back viewing, or developing augmented reality games, Snap can’t stay the course. Despite its hardware ambitions, it’s fundamentally a software company. It has to figure out what makes that software special.
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Snapchat shrinks by 3M users to 188M despite strong Q2
The Stories War has officially killed Snapchat’s growth, leading to its first user count decline ever. In Q2 2018 earnings today, Snapchat’s daily active users number shrank 1.5 percent to 188 million this quarter, down from 191 million and positive 2.9 percent user growth last quarter.
Snapchat did beat earnings expectations with $262.3 million in revenue and a loss of $0.14 while Wall Street estimated an EPS loss of $0.17 with $249.8 million in revenue. Snap’s net loss decreased by 20 percent year-over-year, so it only destroyed $353 million this quarter compared to $385 million last quarter. Snap will have some extra cash to extend its runway despite its still-massive losses thanks to a $250 million investment from Saudi Prince Al-Waleed Talal in exchange for a 2.3 percent stake in the company.
Despite its user count shrinking for the first time since its launch in 2011, the improvement to revenue (up 44 percent year-over-year) and reduced losses led Wall Street to give Snap’s shares an immediate 11 percent pop in after-hours trading. But after dodging multiple questions about how it would improve revenues and when its optimized Android app would arrive, shares fell back to just below the day’s closing price of $13.12.
Snapchat is coming off a disastrous Q1 earnings with its slowest-ever user growth rate that led to a 24 percent plunge in its share price in May. But the company has been highly volatile, seeing a 37 percent boost in its share price after surprisingly positive Q4 2017 earnings. Now it’s proving that Facebook isn’t the only social network with growth troubles.
In hopes of distracting from the shrinking DAUs, Snapchat shared a monthly active user count for the first time: 100 million monthly active users in the U.S. and Canada. Snap says this is the highest it’s ever been, yet the reveal highlights that teens are as addicted to daily Snapchat use as they once were. DAUs are a much more accurate way of measuring engagement and ad revenue potential, as opening a single notification and never returning can still register someone as an MAU.
CEO Evan Spiegel blamed the DAU shrinkage on “a slightly lower frequency of use among our user base due to the disruption caused by our redesign.” But since, he believes “we have now addressed the biggest frustrations we’ve heard” so he’s optimistic about future growth. On the other hand, he credits the redesign as producing an 8 percent increase in retention among users older than 35, demonstrating the new design is more obvious and well labeled.
During the earnings call, Snap’s new CFO Tim Stone mentioned that it’s interested in monetizing every part of the app, including “communication.” That could foreshadow more ads in the messaging inbox beyond the sponsored lenses users can play with to send augmented reality Snaps to friends. Snap is also hoping that after a decline in ad prices as it moved to self-serve auctions, ad prices and revenue will climb.
One big bright point for Snap was that its average revenue per user in the Rest Of World region grew 65 percent just this quarter to reach $0.96. Figuring out how to monetize these developing countries where buying power is lower will be key to the company’s outlook. Snap says it’s still working to re-engineer its Android app to boost performance and reduce churn, since that’s where most of its new users are coming in.
The quarter saw Snapchat escape much of the scrutiny facing other social networks regarding fake news and election interference. But it clearly still has issues with security, as Snapchat accidentally leaked its own source code, which was archived by someone who then posted it to GitHub today, though it was eventually taken down.
Snapchat started running un-skippable ads in its Shows that could be a big money maker if extended to Stories. It began experimenting with e-commerce in earnest, allowing brands to sell things people can buy without leaving the app. It also opened self-serve buying of its augmented reality lens ads that people not only post, but play with for extended periods of time. And it launched its privacy-safe Snap Kit developer platform in hopes that alliances and referral traffic would help revive its user growth.
But problematically, its competitors like Instagram Stories continued to surge, with it now having 400 million daily Stories users and WhatsApp Status now having 450 million. Combined, Facebook has over 1.1 billion daily (duplicated) Stories users across its family of apps. That reach could make it tough for Snap to compete for ad dollars. And with its user count actually decreasing, that could make for a grim future for the teen sensation.
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Snapchat ‘Storytellers’ finally pairs creators with advertisers
Snapchat is arriving very late to the game of courting influencers. Now it hopes to boost ad spend by connecting businesses with its top independent creators, but it won’t take a cut of deals it helps arrange. Today Snap Inc. launches its “Snapchat Storytellers” pilot program that will introduce brands to five of the app’s most popular content makers, including Mplatco, Cyrene Q and Shonduras. They’ll star in ads for Stories and Discover or provide creative direction to brands with their expertise, gleaned from gathering audiences of millions over the past few years, in exchange for cash. Top creators can often earn tens of thousands of dollars or more for deals with brands.
The program is late but a smart move for Snapchat, as it needs to educate businesses about how to make great Stories ads. These often require stylish vertical video that’s a big creative jump from the tiny photo, link and text ads many are accustomed to, or even the pithy landscape videos they’ve learned to make for YouTube or Facebook. If creators can help brands make great-looking ads that perform well, those businesses will be more likely to spend a lot more on Snapchat.
That’s critical for the public company, which lost $385 million last quarter and missed its revenue estimate by $14 million when it brought in $230 million. With Facebook’s Snapchat Stories clones from Instagram and WhatsApp depressing Snap’s user growth rate to a measly 2.9 percent (its lowest rate ever), the company will have to figure out how to squeeze more dollars out of each user it already has. If it can’t do that with better ad creative and performance, it will be forced to rely on annoying unskippable Stories ads, which it rolled out to more businesses yesterday.
Meanwhile, if Snap extends the program to more creators, it could be a good way to help them monetize and stay loyal to the platform. YouTube has long offered ad revenue shares and Facebook’s ad breaks let creators insert commercials into their videos for a cut of the money. Both are experimenting with subscription patronage and tipping options to help creators earn money. Facebook recently launched its Brand Collabs manager that offers an entire search engine of creators that brands can sort by audience demographics.
But Snapchat still doesn’t have any of these options, and its Storytellers program looks half-hearted in comparison. As the social media influencer space matures, many creators are sick of giving away their content for free, and will bring their best work to whichever network helps get them paid.
Still, Snap will take a relatively hands-off approach in terms of how deals between brands and creators are struck. It’s not going to take a cut, nor will creators get locked into exclusivity contracts with Snap or the businesses. Basically, Snap is adding the five creators that include Geeohsnap and Georgio Copter to its Creative Partners list alongside ad agencies and creative studios. If advertisers express interest in a creator, Snap will make an introduction, then leave them to work out the deal.
It’s dumbfounding that Snapchat waited this long to launch this program, and it didn’t even come up with it. It was the endearingly weird former Vine star Shonduras that suggested Snapchat build the program during its first Creators Summit back in May. That shows how out of touch with the creator community Snap was until now. If it can’t grow its user count quickly, it should be doing everything it can to keep creators and advertisers from straying to Facebook’s Stories platforms with a lot more users.
[Correction: Nicholas Megalis made “Gummy Money,” not Shonduras.]
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Snapchat will shut down Snapcash, forfeiting to Venmo
Snapcash ended up as a way to pay adult performers for private content over Snapchat, not just a way to split bills with friends. But Snapchat will abandon the peer-to-peer payment space on August 30th. Code buried in Snapchat’s Android app includes a “Snapcash deprecation message” that displays “Snapcash will no longer be available after %s [date]”. Shutting down the feature will bring an end to Snapchat’s four-year partnership with Square to power the feature for sending people money.
Snapcash may have become more of a liability than a utility. With apps like Venmo, PayPal, Zelle, and Square Cash itself, there were plenty of other ways to pay back friends for drinks or Ubers, so Snapcash may have seen low legitimate usage. Meanwhile, a quick Twitter search for “Snapcash” surfaced plenty of offers of erotic content in exchange for payments through the feature. It may have been safer for Snapchat to ditch Snapcash than risk PR problems over its misuse.
TechCrunch tipster Ishan Agarwal provided the below screenshot of Snapchat’s code to TechCrunch. When presented with the code and asked if Snapcash would shut down, a Snapchat spokesperson confirmed to TechCrunch that it would, explaining: “Yes, we’re discontinuing the Snapcash feature as of August 30, 2018. Snapcash was our first product created in partnership with another company – Square. We’re thankful for all the Snapchatters who used Snapcash for the last four years and for Square’s partnership!” The spokesperson noted that users would be notified in-app and through the support site soon.
Snapcash gave Snapchat a way to get users to connect payment methods to the app. That’s increasingly important as the company aims to become a commerce platforms where you can shop without leaving the app. Having payment info on file is what makes buying things through Snapchat easier than the web and draws brands to use Snapchat storefronts.
We’ll see how Snapchat plans evolve its commerce strategy without this driver. Earlier this month, TechCrunch revealed that Snapchat’s code contained mentions of a project codenamed “eagle” that’s a camera search feature. It was designed to allow users to scan an object or barcode with their Snapchat camera and see product results in Amazon. But since our report, mentions of Amazon have disappeared from the code. It’s unclear what will happen in the future, but camera search could give Snapchat new utility and monetization options.
Snapcash won’t be a part of that future, though. Given Snapchat’s cost-cutting efforts including layoffs, its desperate need to attract and retain advertisers to hit revenue estimates its missed, and its persistent bad rap as a sexting app, it couldn’t afford to support unnecessary features or another scandal.
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Snapchat code reveals team-up with Amazon for ‘Camera Search’
Snapchat is building a visual product search feature, codenamed “Eagle,” that delivers users to Amazon’s listings. Buried inside the code of Snapchat’s Android app is an unreleased “Visual Search” feature where you “Press and hold to identify an object, song, barcode, and more! This works by sending data to Amazon, Shazam, and other partners.” Once an object or barcode has been scanned you can “See all results at Amazon.”
Visual product search could make Snapchat’s camera a more general purpose tool for seeing and navigating the world, rather than just a social media maker. It could differentiate Snapchat from Instagram, whose clone of Snapchat Stories now has more than twice the users and a six times faster gro
wth rate than the original. And if Snapchat has worked out an affiliate referrals deal with Amazon, it could open a new revenue stream. That’s something Snap Inc. direly needs after posting a $385 million loss last quarter and missing revenue estimates by $14 million.
TechCrunch was tipped off to the hidden Snapchat code by app researcher Ishan Agarwal. His tips have previously led to TechCrunch scoops about Instagram’s video calling, soundtracks, Focus portrait mode and QR Nametags features that were all later officially launched. Amazon didn’t respond to a press inquiry before publishing time, and it’s unclear if its actively involved in the development of Snapchat visual search or just a destination for its results. Snap already sells its Spetacles v2 camera glasses on Amazon — the only place beyond its own site. Snap Inc. gave TechCrunch a “no comment,” about visual search but the company’s code tells the story.
Snapchat first dabbled in understanding the world around you with its Shazam integration back in 2016 that lets you tap and hold to identify a song playing nearby, check it out on Shazam, send it to a friend or follow the artist on Snapchat. Project Eagle builds on this audio search feature to offer visual search through a similar interface and set of partnerships. The ability to identify purchaseable objects or scan barcodes could turn Snapchat, which some view as a teen toy, into more of a utility.
What’s inside Snapchat’s Eagle eye
Snapchat’s code doesn’t explain exactly how the Project Eagle feature will work, but in the newest version of Snapchat it was renamed as “Camera Search.” If you remember, Snap used another animal name, “Cheetah”, as the secret word for its big redesign. The app’s code lists the ability to surface “sellers” and “reviews,” “Copy URL” of a product and “Share” or “Send Product” to friends — likely via Snap messages or Snapchat Stories. In characteristic cool kid teenspeak, an error message for “product not found” reads “Bummer, we didn’t catch that!”
Eagle’s visual search may be connected to Snapchat’s “context cards,” which debuted late last year and pull up business contact info, restaurant reservations, movie tickets, Ubers or Lyfts and more. Surfacing within Snapchat a context card of details about ownable objects might be the first step to getting users to buy them… and advertisers to pay Snap to promote them. It’s easy to imagine context cards being accessible for products tagged in Snap Ads as well as scanned through visual search. And Snap already has in-app shopping.
Snapchat’s Camera Search could become a direct competitor for Pinterest’s Lens, which identifies objects and brings up related content. Pinterest has evolved the product, embedding it inside the apps of retailers like Target. Beyond shopping, Camera Search could let Snapchat users find Stories that contain the same object they’re snapping.
Being able to recognize what you’re seeing makes Snapchat more fun, but it’s also a new way of navigating reality. In mid-2017 Snapchat launched World Lenses that map the surfaces of your surroundings so you can place 3D animated objects like its Dancing Hotdog mascot alongside real people in real places. Snapchat also released a machine vision-powered search feature last year that compiles Stories of user-submitted Snaps featuring your chosen keyword, like videos with “puppies” or “fireworks,” even if the captions don’t mention them.
Pinterest’s Lens visual search feature
Snapchat was so interested in visual search that this year, it reportedly held early-stage acquisition talks with machine vision startup Blippar. The talks fell through with the U.K. augmented reality company that has raised at least $99 million for its own visual search feature, but which recently began to implode due to low usage and financing trouble. Snap Inc. might have been hoping to jumpstart its Camera Search efforts.
Snap calls itself a camera company, after all. But with the weak sales of its mediocre v1 Spectacles, the well-reviewed v2 failing to break into the cultural zeitgeist and no other hardware products on the market, Snap may need to redefine what exactly that tag line means. Visual search could frame Snapchat as more of a sensor than just a camera. With its popular use for rapid-fire selfie messaging, it’s already the lens through which some teens see the world. Soon, Snap could be ready to train its eagle eye on purchases, not just faces.
In related Snapchat news:
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Now Snapchat lets you unsend messages like Faceboook promised
Mark Zuckerberg’s Facebook messages were retracted from the inboxes of some users, six sources told TechCrunch in April. Facebook quickly tried to normalize that breach of trust by claiming it would in the coming months give everyone the ability to unsend messages. We haven’t heard a word about it since, and Facebook told me it had nothing more to share here today.
Well Snap is stepping up. Snapchat will let you retract your risqué, embarrassing or incriminating messages thanks to a new feature called Clear Chats that’s rolling out globally over the next few weeks.
Hold down on a text, image, video, memory, sticker or audio note in a one-on-one or group chat Snapchat message thread and you’ll see a Delete button. Tap it, and Snapchat will try to retract the message, though it admits it won’t always work if the recipient lacks an internet connection or updated version of the app. The recipient will also be notified… something Facebook didn’t do in the case of Zuckerberg’s messages.
The Clear Chats feature could make people more comfortable sending sensitive information over Snapchat. The app already auto-deletes messages after they’re viewed, unless a recipient chooses to screenshot or Save them, which their conversation partner can see. This could be especially useful for thwarting cases of revenge porn, where hackers or jilted ex-lovers expose someone’s nude images.
Unfortunately, the Clear Chats option could also be used to send then retract abusive messages, destroying the paper trail. Social media evidence is increasingly being used in divorce and custody battles, which an unsend feature might undermine… especially if Facebook goes through with rolling it out on its platform where messages are normally permanent. But right now, Snapchat’s priority is doing whatever it can to boost usage after hitting its slowest growth rate ever last quarter. If teens feel like Snapchat is a consequence-free place to message, whether or not that’s true, they might favor it over SMS and other social apps.
More Snapchat Spectacles and e-commerce news
Snap made a few other announcements today. Spectacles v2, which are actually pretty great and I continue to use, are now available for purchase through Amazon in the U.S., U.K and Canada. The $150 photo- and video-recording sunglasses come to more European countries via Jeff Bezos soon, such as France, Germany, Italy and Spain. Amazon will sell Spectacles in three color combos: Onyx Moonlight, Sapphire Twilight and Ruby Daybreak.
Until now, you could only buy v2 on Snap’s website. That’s because Snapchat’s eagerness to develop a bevy of sales channels made it very tough to forecast demand for its lackluster v1 Spectacles. They only sold 220,000. That led to hundreds of thousands of pairs gathering dust unsold in warehouses, and Snapchat taking an embarrassing $40 million write-off.
“We had an inventory challenge with v1,” Snap’s VP of hardware Mike Randall told me in April. “We don’t think it was a product issue. It was an internal understanding our demand issue versus a planning issue. So we think by having a more simplistic channel strategy with v2 we can more thoughtfully manage demand with v2 versus v1.” Working with Amazon and its robust toolset should help Snap get Spectacles in front of more buyers without obscuring how many it should be manufacturing.
Still, the worst thing about Spectacles is Snapchat. The inability to dump footage directly to your phone’s camera roll, and the incompatibility of its round media format with other social networks, means it’s tough to share your Spectacles content anywhere else while making it look good. Snap has experimented with a traditional landscape export format, but that hasn’t rolled out. Spectacles could strongly benefit from Snap partnering with fellow apps or open sourcing to let others show its circular always-full-screen format in all its glory.
Finally, Snapchat is launching a new e-commerce ad unit that shows a carousel of purchaseable items at the bottom of the screen that users can tap to buy without leaving the Snapchat app. This follows our prediction that Snap launching its own in-app merch store was really the foundation of a bigger e-commerce platform that’s now rolling out.
Merchants can use the Snap Pixel to measure how their ads lead to sales. The ability to shave down the e-commerce conversion funnel could get advertisers spending more on Snapchat when it could use the dollars. Last quarter it lost $385 million and missed its revenue target by $14 million.
Snapchat is also bringing its augmented reality advertisements to its self-serve ad-buying tool. They’re sold on an effective CPM basis for $8 to $20 depending on targeting. Snapchat is also turning its new multiplayer game filters, called Snappables, into ads.
Overall, it’s good to see Snapchat iterating across its software, hardware and business units. Plagued by executive departures, fierce competition from Facebook, a rough recent earnings report and share price troubles, it’s easy to imagine the team getting distracted. The long-term roadmap is fuzzy. With Stories becoming more popular elsewhere, Spectacles sales not being enough to right the ship and Instagram preparing to launch a long-form video hub that competes with Snapchat Discover, Snap needs to figure out its identity. Perhaps that will hinge on some flashy new feature that captures the imagination of the youth. That could be its upcoming Snapkit platform that will let users log into other apps using their Snapchat credentials, bring their Bitmoji, and even use Snap’s AR-equipped software camera within other apps.
But otherwise, it must lock in for a long-haul of efficient and methodical improvement. If it’s not growing, the best it can do is hold on to its core audience and squeeze as many dollars out of them as possible without looking desperate.
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Speech recognition triggers fun AR stickers in Panda’s video app
Panda has built the next silly social feature Snapchat and Instagram will want to steal. Today the startup launches its video messaging app that fills the screen with augmented reality effects based on the words you speak. Say “Want to get pizza?” and a 3D pizza slice hovers by your mouth. Say “I wear my sunglasses at night” and suddenly you’re wearing AR shades with a moon hung above your head. Instead of being distracted by having to pick effects out of a menu, they appear in real-time as you chat.
Panda is surprising and delightful. It’s also a bit janky, created by a five person team with under $1 million in funding. Building a video chat app user base from scratch amidst all the competition will be a struggle. But even if Panda isn’t the app to popularize the idea, it’s invented a smart way to enhance visual communication that blends into our natural behavior.
It all started with a trippy vision. Panda’s 18-year-old founder Daniel Singer had built a few failed apps and was working as a product manager at peer-to-peer therapy startup Sensay in LA. When Alaska Airlines bought Virgin, Singer scored a free flight and came to see his buddy Arjun Sethi, an investor at Social Capital in SF. That’s when suddenly “I’m hallucinating that as I’m talking the things I’m saying should appear” he tells me. Sethi dug the idea and agreed to fund a project to build it.
Panda founder Daniel Singer
Meanwhile, Singer had spent the last 6 years FaceTiming almost every day. He loved telling stories with his closest friends, yet Apple’s video chat protocol had fallen behind Snapchat and Instagram when it came to creative tools. So a year ago he raised $850,000 from Social Capital and Shrug Capital plus angels like Cyan (Banister) and Secret’s David Byttow. Singer set out to build Panda to combine FaceTime’s live chat with Snapchat’s visual flare triggered by voice.
But it turns out, “video chat is hard” he admits. So his small team settled for letting users send 10-second-max asynchronous video messages. Panda’s iOS app launched today with about 200 different voice activated stickers from footballs to sleepy Zzzzzs to a “&’%!#” censorship bar that covers your mouth when you swear. Tap them and they disappear, and soon you’ll be able to reposition them. As you trigger the effects for the first time, they go into a trophy case that gamifies voice experimentation.
Panda is fun to play around with yourself even if you aren’t actively messaging friends, which is reminiscent of how teens play with Snapchat face filters without always posting the results. The speech recognition effects will make a lot more sense if Panda can eventually succeed at solving the live video chat tech challenge. One day Singer imagines Panda making money by selling cosmetic effects that make you more attractive or fashionable, or offering sponsored effects so when you say “gym”, the headband that appears on you is Nike branded.
Unfortunately, the app can be a bit buggy and effects don’t always trigger, fooling you that you aren’t saying the right words. And it could be tough convincing buddies to download another messaging app, let alone turn it into a regular habit. Apple is also adding a slew of Memoji personalized avatars and other effects to FaceTime in its upcoming iOS 12.
Panda does advance one of technology’s fundamental pursuits: taking the fuzzy ideas in your head and translating them into meaning for others in clearer ways than just words can offer. It’s the next wave of visual communication that doesn’t require you to break from the conversation.
When I ask why other apps couldn’t just copy the speech stickers, Singer insisted “This has to be voice native.” I firmly disagree, and can easily imagine his whole app becoming just a single filter in Snapchat and Instagram Stories. He eventually acquiesced that “It’s a new reality that bits and pieces of consumer technology get traded around. I wouldn’t be surprised if others think it’s a good idea.”
It’s an uphill battle trying to disrupt today’s social giants, who are quick to seize on any idea that gives them an edge. Facebook rationalizes stealing other apps’ features by prioritizing whatever will engage its billions of users over the pride of its designers. Startups like Panda are effectively becoming outsourced R&D departments.
Still, Panda pledges to forge on (though it might be wise to take a buyout offer). Singer gets that his app won’t cure cancer or “make the world a better place” as HBO’s Silicon Valley has lampooned. “We’re going to make really fun stuff and make them laugh and smile and experience human emotion” he concludes. “At the end of the day, I don’t think there’s anything wrong with building entertainment and delight.”
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Snapchat preps Snapkit platform to bring camera, login to other apps
Snapchat is secretly planning the launch of its first full-fledged developer platform, currently called Snapkit. The platform’s prototypes indicate it will let other apps offer a “login with Snapchat” options, use the Bitmoji avatars it acquired and host a version of Snap’s full-featured camera software that can share back to Snapchat. Multiple sources confirm Snap Inc. is currently in talks with several app developers to integrate Snapkit.
The platform could breathe new life into plateauing Snapchat by colonizing the mobile app ecosystem with its login buttons and content. Facebook used a similar strategy to become a ubiquitous utility with tentacles touching everyone’s business. But teens, long skeptical of Facebook and unsettled by the recent Cambridge Analytica scandal, could look to Snapchat for a privacy-safe way to log in to other apps without creating a new username and password.
Snap Inc. declined to comment on this story.
Years of developer neglect
Snapchat is making a big course correction in its strategy here after years of rejecting outside developers. In 2014, unofficial apps that let you surreptitiously save Snaps but required your Snapchat credentials caused data breaches, leading the company to reiterate its ban on using them. It also shut off sharing from a popular third-party music video sharing app called Mindie. In fact, Snap’s terms of service still say “You will not use or develop any third-party applications that interact with the Services or other users’ content or information without our written consent.”
A year ago I wrote that “Snap’s anti-developer attitude is an augmented liability” since it would be tough to populate the physical world with AR experiences unless it has help like Facebook had started recruiting. By December, Snapchat had launched Lens Studio, which lets brands and developers build limited AR content for the app. And it’s been building out its cadre of marketing and analytics partners with which brands can work.
Yet until now, Snapchat hadn’t created functionality that developers could use in their own apps. Snapkit will change that. We don’t know when it will be announced or launched, or who will be the initial developers who take advantage of it. But with Snapchat slipping to its lowest user growth rate ever after being pummeled by competition from Facebook and Instagram, the company needs more than a puppy face filter to regain the spotlight.
SnapPlat
According to sources familiar with Snap’s discussions with potential developers, Snapkit’s login with Snapchat feature is designed to let users sign up for new apps with their Snapchat credentials instead of creating new ones. Because Snap doesn’t collect much personal info about you, unlike Facebook, there’s less data to worry about accidentally giving to developers or them misusing. Displaying its branded button on various app’s signup pages could lure in new Snapchat users or reengage lapsed ones. It’s also the key to developing tighter ties between Snap and other apps, even if users sign up for apps another way.
One benefit of another app knowing who you are on Snapchat, which the company plans to provide with Snapkit, is the ability to bring your Bitmoji avatar with you. Snapchat acquired Bitmoji’s parent company Bitstrips for just $64.2 million in 2016, but the cartoonish personalized avatar app has been a staple of the top 10 chart since. It remains one of Snapchat’s most differentiated offerings, as Facebook has only recently begun work on its clone called Facebook Avatars.
While Bitmoji has offered a keyboard full of your avatar in different scenes, Snapkit could make it easy to add yours as stickers on photos or in other ways in third-party apps. Seeing them across the mobile universe could inspire more users to create their own Bitmoji lookalike.
Snapchat is also working on a way for developers to integrate its editing tool-laden and AR-equipped camera into their own apps. Instead of having to reinvent the wheel if they want to permit visual sharing and inevitably building a poor knockoff, apps could just add Snapchat’s polished camera. The idea is the photos and videos shot with the camera could then be used in that app as well as shared back to Snapchat. Similar to Facebook and Instagram Stories opening up to posts from third-parties, this could inject fresh forms of content into Snapchat at a time when usage is slipping.
Launching a platform also means Snapchat will take on new risks, as third-parties with access to user data could be breached. Snap also will have to convince developers that making it easier for its 191 million daily users to join their apps is worth the engineering resources, given how that community is dwarfed by the multi-billion user Google and Facebook login systems. Login with Snapchat could be especially popular with teen-focused anonymous, or dating, apps you don’t want connected to your Facebook profile.
Snapchat has struggled to get out of Facebook’s shadow despite inventing or acquiring what would become some of the hottest trends in social. Yet Snap Inc. could develop alliances with a platform that leverages its differentiators — a teen audience that doesn’t care for Facebook, inherent privacy and custom avatars. Through an army of developers, Snapchat might find the firepower to challenge the blue empire.
For more on Snapchat and its competitors, check out our other coverage:
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