THE BLOG

SnapChat Valued At $19 Billion: Property On Exclusive Islands Is Expensive

02/20/2015 03:51 pm ET | Updated Apr 22, 2015

Consumers have a decreasing attention span for new apps, but they will download and use individual apps that offer them something unique. SnapChat has proven its offering brings this unique value -- with a service that is more akin to a conversation than most digital communications that boast cloud storage. I say something or share a photo. It's there in the ether for those I trust to consume. Then it is gone.

How did Snapchat get here? In mobile, two things matter: audience and data. SnapChat has audience -- proven through its growth and usage.

Brands can learn from Snapchat here -- it will no longer suffice to pursue a "destination" strategy and expect consumers to arrive at said destination. Rather, consumers need to be engaged where they already are. Facebook's acquisition of WhatsApp for $19B gave us a sense of just how valuable audience depth, reach, and usage can be.

Scarce Mobile Property Drives Value

Despite millions of apps and billions of phones, territory or space on a mobile phone is more like an island than outer space. Space within consumers' attention span or bandwidth and home screens is limited, and this scarcity of property drives up valuations -- like the latest Snapchat numbers from this week.

Further, mobile properties are being bought up and established quickly, ranging from maps, email, and IM to wallets, home and health, or wellness. The race is on to own these audiences - and the resulting data.

These large property holders on the mobile island are counting on the fact that hundreds or thousands of enterprises will rely upon them to reach their customers. But the future value is still really unknown.

For now, enterprises need a mobile strategy that considers three core categories of mobile moments: owned, borrowed, and lent.

  1. Enterprises own mobile moments when a consumer downloads their app and engages with the brand directly. Earning "owned mobile moments" is tough. Most brands will own a minority of mobile moments with their customers. This is what Forrester refers to as a destination strategy. Destination strategies work if apps offer unique services or content. United Airlines, for example, offers mobile boarding passes within their app.
  2. In addition to owning mobile moments, brands must borrow mobile moments. They have to go serve their customers where they are - on Facebook, Google Maps, SnapChat, WeChat, etc. Continuing with the United Airlines example, United allows passengers to access a mobile boarding pass within Apple Passbook or an itinerary within TripIt. They borrow mobile moments from both.
  3. Work with your ecosystem partners and lend mobile moments to your partners when you share clients. United Airlines, for example, lends mobile moments to Uber by allowing their passengers to access Uber services within the United Airlines app.