Snapchat CEO Evan Spiegel says TikTok is more friend than foe

Snapchat CEO Evan Spiegel proclaims TikTok a friend, even as industry experts say the rival app could steal the attention of teenagers.

“We definitely consider them a friend,” Spiegel said Tuesday about the Chinese-based social media app that has surged to popularity in the past year, especially among Snapchat’s core audience of 13- to 24-year-olds. His comments came during an earnings call with Wall Street analysts Tuesday following release of the company’s third-quarter report.

TikTok is even a developer partner, Spiegel said. TikTok is integrated with Snapchat’s developer program, which lets third-party apps build services on the platform. TikTok is also an advertiser on Snapchat.

In its quarterly filings, Snapchat reported 50 percent year-over-year growth in revenue, mostly from ad sales. Snapchat generated $446 million in the third quarter. Daily active users rose 13 percent year over year to 210 million people.

Debra Aho Williamson, principal analyst from eMarketer, warned about the threat of TikTok. “Competition from upstart social platform TikTok is still looming, however, and it could lead to lower engagement for Snapchat in the future, because both platforms target the youth audience," Aho Williamson said in an e-mail statement Tuesday.
 
Spiegel downplayed the competition, saying TikTok offers a different experience to his messaging and media app.

Snapchat celebrated its eighth year in business in September. Spiegel reflected on the early days of the company, touting some early decisions that helped position the company in today’s social media climate. Spiegel referred to Snapchat’s emphasis on privacy and visual communications, with the focus on the camera in the app, as two of the decisions that set the company up for success.

“Many of the choices we made when Bobby [co-founder Bobby Murphy] and I were just getting started have created significant tailwinds for our business today,” Spiegel said in his written remarks ahead of an earnings call with Wall Street analysts, “including our focus on privacy, ephemerality, self-expression—and most importantly, our decision to open Snapchat directly into the camera.”

Spiegel was referring to many of the core facets of Snapchat that make the app unique, even if they were challenges at first. Spiegel's decisions to prioritize privacy, for instance, made it more difficult to develop ad targeting products for advertisers. Also, the ads and other videos in the app are ephemeral, meaning they disappear within 24 hours—a disappearing act that unnerved many advertisers.

Lastly, Spiegel referred to the centrality of the camera, which is the first screen people see when they open Snapchat, not a feed of videos and images that could house more ads.

Snapchat posted a strong quarter, however, which signaled the company was starting to find its footing. The growth in revenue was the third quarter in a row that revenue growth accelerated. However, Snapchat’s guidance for the fourth quarter forecast that revenue growth could slow to between 38 percent to 44 percent compared to the fourth quarter of last year. Snapchat forecast fourth-quarter revenue of between $540 million and $560 million.

Snapchat’s stock sank nearly 5 percent in after-hours trading.

The company highlighted business bright spots in its earnings report, including the Discover media section, which hosts ad-supported channels and shows from top publishing and entertainment partners. Snapchat said that each of more than 100 Discover channels command audiences of more than 10 million people a month.

Snapchat updated ad formats within the past quarter to let advertisers run video ads of up to three minutes long, instead of a 10-second limit. The ads are still skippable, but the change was seen as a way to give advertisers a break. Instead of having to cut video ads to fit Snapchat, they can employ the same ads they use elsewhere.

Snapchat also launched a gaming platform this year, which is a hub within the app that features mobile video games.

Jeremi Gorman, Snapchat’s chief business officer, said that the ad sales team has completed a reorganization to focus on industry verticals like entertainment, retail and travel, replacing a regional sales structure.

“With our sales team set up for operational success, we will now have the ability to be strategic in how we choose to prioritize advertisers, on which verticals we focus and how we will drive go-to-market strategies to improve advertiser demand,” Gorman said in the earnings call remarks.

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CORRECTION: An earlier version of this story mischaracterized Evan Spiegel's remarks. The Snapchat CEO spoke positively about early decisions that emphasized privacy and focused the app on the camera. The headline has been changed to reflect the update.