Much has been written over the past few months about Facebook taking inspiration for new product features — Instagram Stories, the recent Messenger Day — from Snapchat. Given that Snapchat’s user base growth slowed to a moribund 3% in the last quarter for which it reported while Facebook’s growth continues unabated, ineluctably toward 2BN MAU and seemingly at the expense of Snapchat, the clone topic makes for relevant and timely water cooler chat.
But putting aside any flawed commentary about Facebook hurting its engagement by closing Snapchat features (read this and this from a former Facebook PM to understand why this notion is silly), the conversation somewhat misses the point: Facebook is operating against a video-centric product strategy founded upon a well-defined advertising monetization model in a market for an advertising product, mobile app installs, that it largely controls. So when Facebook implements a feature — any feature, Snapchat clone or otherwise — it can measure the performance of that feature against not only engagement and user base growth, but also by how it is accommodated by its business model; ie., how it serves the interests of advertisers.
In other words, since Facebook’s implementation of Snapchat features serves a better master — mobile app installs — then it doesn’t really matter that Snapchat conceived of them. The fact of that matter is that Snapchat’s value proposition to advertisers is far muddier than Facebook’s as a result of the realities of the core Snapchat product, ephemeral video. Snapchat’s features can easily be cloned in Facebook’s products to serve Facebook’s business model, but those same features in Snapchat don’t provide nearly as much utility to Snap’s advertising business because of the way its core product works.
Put another way: Snapchat is feverishly trying to build the same suite of performance-driven advertising tools that Facebook offers advertisers, but those tools are at fundamental odds with its product’s core use case and thus don’t provide nearly as much utility to advertisers as Facebook’s tools. Meanwhile, Facebook is almost effortlessly cloning Snapchat’s product features and, because of the rich set of data artifacts its products create about users, those features do nothing but supports its mobile app install business.
This dynamic raises a question: what does Facebook do well in terms of serving advertisers that Snapchat doesn’t?
The answer is that it excels in the requisite functionality that allows performance marketers to measure the ROI of their campaigns: sophisticated targeting capabilities.
Probably the biggest innovation that Facebook popularized in digital advertising is the lookalike audience: sets of people that are thought to be similar to an existing audience. Facebook doesn’t make public how it measures or matches “lookalikes”, but I’ve heard it is based on a set of attributes –that is, characteristics and behavioral cues — that numbers in the tens of thousands. Facebook can classify people this many ways because it not only tracks user behavior (like log-ins per day, time per session, ad clicks, etc.), but it also has access to a wealth of deterministic data that users supply through using the product (especially around their interests via group subscriptions, interactions, etc.).
Snapchat also offers a lookalike audience feature, but almost by definition it can’t be as precise as Facebook’s given its lack of deterministic data: prior to launching its latest suite of advertising tools in late 2016 (which included lookalike targeting), Snapchat only allowed advertisers to target users based on age, gender, location, device, carrier, and content. Facebook’s interest targeting is much more extensive: its Demographic targeting category alone contains a number of very specific sub-fields which can be further drilled down into granular values (eg. targeting people who studied Computer Science for more than 4 years or who work at a particular set of companies, as defined in their Facebook profiles).
While Snapchat has improved its behavioral targeting capabilities, the fundamentals of the platform may prevent those capabilities from ever being as precise as Facebook’s: Snapchat users simply don’t volunteer as much demographic information as Facebook users do via their profiles.
And while both companies offer targeting capabilities to reach specific users based on unique identifiers like email address or device advertising ID — Facebook with Custom Audiences and Snapchat with Audience Match — the scale of Facebook’s user base makes that feature so much more effective and powerful than on Snapchat. Again, it seems unlikely that Snapchat will ever catch up to Facebook here, and so it calls into question whether an advertiser with limited budget, time, and attention would choose to work with both platforms knowing that the specific users they want to target via their email addresses or advertising IDs almost certainly exist on Facebook and Instagram.
But what about Brand Advertising?
Snapchat’s product model is an obvious fit for brand advertisers, and it is creating innovative ad products such as sequential video ads to lure them en masse onto its platform. But Facebook is doing things with video to serve brands that are just as innovative: it’s in no less privileged of a position to benefit from the shift of advertising dollars from TV to video than Snapchat is, but via its targeting capabilities, it is also the de facto go-to platform for performance marketers with mobile app install ads.
And so targeting becomes no less important just because brand dollars shift to mobile. There’s no reason that mobile app install ads will stop generating revenue simply because brands spend heavily on mobile; mobile isn’t a trend, it’s a secular technological and consumer behavioral shift, and increased advertising spend is across the board. But with its data set and targeting capabilities, Facebook can benefit from brand spend in the same way it has benefited from mobile app install spend.
Facebook can do what Snapchat does; the success of its featuring cloning is a testament to that. But the opposite isn’t true: for fundamental reasons, Snapchat can’t clone Facebook’s ads targeting tools to become competitive with its mobile app install business because it simply doesn’t have access to the same type of data that Facebook does.