This is my takeaway from Kleiner Perkins Caufield & Byers 2016 internet trends presentation. http://www.kpcb.com/internet-trends Some I agree with, some I think is hyperbole.

Snapchat's Ads are effective. More effective than anything else on the internet or other apps. They are authentic, entertaining, in-context and brief. They follow the 3Vs: Vertical (Made for Mobiles) / Video (Great Way to Tell Story) / Viewing (Always Full Screen).

Snapchat's average monthly use per visitor is way above other social networks for the younger generation. And it is growing incredibly fast.

Advertisers are able to integrate deeply into the app in various unique and interesting ways.

Snap chat is the leader a new wave of advertising, in the way Facebook did a few years ago, and google before that.

You should add a 4th V which is very important to why advertisers are liking SnapChat, which is Volume. SnapChat ads naturally have sound on and users expect it to be that way; another element to its similarities to television advertising.

Yep. First time I saw it, I thought, this is a major alternative to TV. Twitter had the tv hashtag space locked up but now you can do live snapchat along side live programming.

My questions re: "effectiveness" is what can they do beyond brand awareness? Can Snapchat capture advertisers who are more interested in CPC than CPM? Can it drive sales in a meaningful way? Maybe it doesn't matter, as brand awareness advertising is a big money game and somebody has to replace traditional TV (and even magazine) spend.

I do a lot of inbound marketing for B2B companies. I've been thoroughly surprised at the number of clients I see asking for Snapchat marketing, and the number of people in my industry promoting their Snapchat channels aggressively.

For B2B, Facebook is more or less dying. Twitter has too much noise. I'm still trying to figure out how Snapchat fits in here but people are promoting it aggressively at least

I've seen the same (also a marketing guy), but we both know that most companies always chase the shiny new thing regardless of its actual effectiveness. I'm a Snap fan and can't wait to experiment with the ads API at some point, I'm just wondering where its place is come budget analysis time.

I'm not a believer myself—not that I don't find Snapchat compelling, just not necessarily $18-35 billion compelling—but here's my best shot at a devil's advocate argument.

Snapchat is the proverbial 'new MTV' that marketers have been waiting to see appear on the internet for perhaps 20 years. Huge numbers of young people use it daily. Engagement is great, perhaps unlike any other consumer internet product: you watch it the way you watch tv. Just queue up a bunch of stories and stare at it for a while. Advertisers and the brands they represent like this. A lot.

The newly renamed Snap Inc has even greater ambitions. They aim to be the 'new Apple.' A consumer electronics line that achieves more than customer loyalty, something more like emotional commitment. The sort of 'brand identity' that gets written about in textbooks but rarely actually exists in the world. A company that produces functional gadgets that are meant to be flaunted like jewelry.

Is Evan Spiegel the 'new Steve Jobs'? Personally, I doubt it. But there are plenty of wealthy and connected people who seem very invested in that notion becoming reality.

I suppose the argument is that Snapchat has the younger userbase that drifted away from Facebook once everyone and their mother hopped onto the FB bandwagon. With products like Discover, Snapchat is positioning itself as an advertising platform to go up against FB and Google to corner the "hard to find" millennials market.

That being said, I think Snapchat's current valuation is wildly overblown and that they are trying to cash out on an IPO before advertisers realize that the ROI isn't there. Snapchat already has some of the highest CPMs in the market, and their sponsored content is incredibly expensive. I think advertisers wanted to experiment with the platform, but I think the jury's still out if it's worth it. Regardless, if Snapchat can lock in a few high priced deals they can gain some momentum into an IPO, but once they go public, there's going to be much more scrutiny in their metrics. I suspect blowing hundreds of thousands of dollars to woo the fickle, ad-adverse millennial with a filter will ultimately prove ineffective.

I think that part of the reason twitter is doing the way it's doing is the less than stellar user engagement. AFAIK snapchat is killing it on that front. Idk if that justifies the valuation but I do see the general public a lot more pumped about it than I've ever seen people pumped about Twitter (ymmv).

From what I've heard, if you are 13-25 with a smartphone, there's a good chance your primary source of communication is snapchat. And unlike other platforms (WeChat, WhatsApp), snapchat has a content delivery mechanism. So not only do friends connect with friends, but they also connect with businesses, celebrities etc.

Twitter was never about fast communication between two people, no one every said "Let's see if Mike wants to join us for dinner, I'll just Twitter DM him". Whereas WeChat, Viber, Whatsapp allows you to communicate quickly, there's no connection to advertisers (from what I know). Therefore snapchat is valued so highly because it does what twitter and Whatsapp et al couldn't do.

Your understanding of WeChat is not very accurate. It's on a completely different level of integration with daily life than Facebook, Instagram, Snapchat, or anything else. It doesn't really do ads because companies run their shop on WeChat. It has a payment system, it lets you book and pay for taxis, order lunch, etc. In comparison, Snapchat is hot air.

Hmm I didn't know that about WeChat. I've never used it, thanks for the clarification.

User engagement doesn't pay the bills.

Have you used snapchat? Swipe left from the main screen and I'm shown 4-5 advertisements right away. User engagement + advertisements = bills paid.

Users' appetite for more ads will, in 100% of cases, diminish before shareholder appetite does.

spoken like someone who hasn't used the product. snapchat's ads fit the format amazingly well, and now that snapchat is also paying for content directly everyone's incentives are aligned to make a deeply engaging product that monetizes well without alienating users.

I have. I'm saying that especially when public, there is no such thing as enough profitability. There's no number of ads that will satisfy shareholder demands. They'll have to squeeze more and more and the only possible signal that "more" has become "too much" is necessarily when users start walking away from the service.

It's not necessarily just ads. There's content. Aston Kutcher in a recent podcast talked about "vertical video" meaning people develop content specifically aimed at mobile users watching on a portrait phone. Snapchat is primed to deliver that content. Saying that there are not enough ads is like saying YouTube was a terrible buy for Google.

With enough ads, it does.

(And you can also try and leverage it to get VCs to pay your bills.)

With enough ads user engagement also goes down. If Snapchat pushes it too far it will drive users off the platform and onto the next "cool" thing.

I think that to some extent decrease in engagement due to ads is a constant. Some engagements are larger than others and can handle that decrease.

As it stands now, you need to actively choose to play an ad, and that's how the impression is made. This is why Snapchat commands a higher CPM, because the user is actively in front of the screen.

However, I never look at the ads and instead stick to my friend's user generated content. Once ads are forced on users, they will jump ship.

Big user base coveted by advertisers. There's also clearly a market for a social network for teenagers separate from Facebook (so kids don't have their parents spying on them).

> There's also clearly a market for a social network for teenagers separate from Facebook

Bebo failed at that.

I would look at similar products in international markets(especially SE Asia) for how insanely huge Snapchat could become.

While we're on the subject of realistic company valuations, what do you think of FB?

> I would love to hear arguments

I wouldn't. Face it, this class of SV "startups" are the new pump-and-dump investment vehicles. They burned $3B in funding to build a chat app, and Prince Bin Talal needs to cash out with 10X return at some point.