Ever since Snap Inc (NYSE:SNAP), the parent company of messaging app Snapchat, went public in March, I’ve tried to discuss the company’s plausible future in a firm but fair manner. For instance, I’d be the first to say it’s a clever, habit-forming idea, and the platform can obviously draw some sort of crowd. On the other hand, I would also be the first to say founders Evan Spiegel and Bobby Murphy were merely lucky to have stumbled into their success, as nobody could have designed such a stunningly silly but amazingly magnetic app aiming to capitalize on a (very) nuanced psychology.
There are some serious psychological underpinnings in play here that bode well for the company, however. Snap naysayers (and I’m one of them) may want to chew on what’s really happening here.
The Psychology of Snapchat
Just for the record, I still say Snap is going to crash and burn. Between Facebook Inc (NASDAQ:FB) effectively cloning Snapchat via Instagram on a near-weekly basis, finance related and profitability issues and ultimately-inexperienced management, too many pitfalls lie in the company’s path.
Nevertheless, there’s a powerful psychological force that makes the app a habit-forming one advertisers love to utilize. It’s worth a closer look, if only to appreciate it when a company other than Snap finds the same winning formula.
For the unfamiliar, Snapchat isn’t your usual messaging app. Unless someone saves a screenshot of post, it evaporates forever in ten seconds. Indeed, the message isn’t even so much about words, but about a picture taken by the user; most are (unsurprisingly) selfies. There’s also a library of digital stickers and embellishments that can be added to the image, just to make them more fun or funnier, like adding animal ears and an animal nose to your face.
Sounds like something only a small kid or an extreme narcissist would love? That’s certainly a reality, but there’s more to it than that. The app’s never-ending stream of pictures is stunningly addictive.
A Look at SNAP
Back in 2015, then-Ph.D. candidate Joseph B. Bayer and University of Michigan professors Nicole B. Ellison, Sarita Y. Schoenebeck and Emily B. Falk took a detailed look at what made Snapchat so engaging, penning their findings in a collective paper titled ‘Sharing the small moments: ephemeral social interaction on Snapchat.’ The documentation included some snippets of conversations with Snapchat users, like this one:
“Snapchat is basically a messaging service and Facebook is, you know, everything else…. Facebook content actually exists where Snapchat content – it’s sort of destroyed. So Facebook is sort of like a modern day time capsule where you can go back and look at these things
whereas Snapchat is an in-the-moment example of what’s going on.”
That participant’s echo those of another of the study’s subject’s, who opined:
“Snapchat is more like, ‘Here is ten seconds of what’s happening to me right now. Find out what’s happening or else you can’t know because it’s going to go away.’ Kind of like in life if you’re talking with a friend or something, you want to pay attention to what they’re talking about.”
What’s going on here? A lot of psychology, as it turns out.
It’s a couple years old now, but a slideshow put together by Dori Adar, Victoria Young and Nir Eyal lays out the compelling, almost-addictive nature of the app. In short, the temporary nature of the Snapchat’s messages means users can be more ‘carefree’ with what they send, a term also thrown around in Bayer’s study.
That’s freeing in and of itself. In more scientific terms, the fleeting nature of Snapchat-sent message reduces the ‘cognitive load’ of worrying about photos sent via the app. Adar, Eyal and Young also recognize that the premise of reciprocity applies, meaning users innately feel the need to respond with a pictures of their own when they receive one. This can create an vicious and occasionally annoying cycle, though a cycle nonetheless.
That’s not the only psychological principle at work here, however. There’s also the idea of scarcity — that picture is going away, soon. Business and Brand Strategist Martin Hiesboeck explains:
“On Snapchat you make that conscious decision, whereas on Twitter or Facebook, you spend much more time looking at content that is essentially irrelevant to you. Psychologically, Twitter and Facebook numb the senses, whereas Snapchat focuses the attention. That, in a nutshell, is why brands love it.”
He’s right. With the platforms offered by Facebook and Twitter Inc (NYSE:TWTR), you can always go back and look at something later, even though you don’t. The fear of missing out on what Snapchat feeds you, however, is a powerful force drawing user eyeballs to the app on a stunningly consistent basis.
Bottom Line for SNAP Stock
While the psychology works, there’s a fatal flaw in the business model. That is, ad overload. Most Snapchat users are younger, teenagers and twenty-somethings, and have trained themselves to ignore and look past advertisements even as they’re intently looking at the pictures appearing before and after ads.
The solution to getting a better ROI on those ads, then, is to (1) insert more them, and/or (2) encourage more users to sign and then encourage them to follow (or be followed by) more users. Either way, the stage is set for stimulation overload that will eventually force a user lose interest in the app.
In other words, the trick for Snap is finding the right balance of too many ads and not enough ads, and still managing to grow its user base in an environment saturated by Facebook’s Instagram and more recently a frenemy called Sarahah (which may well exacerbate the brewing Snapchat-fatigue). It doesn’t seem inexperienced CEO Evan Spiegel has that kind of self-restraint that will ultimately prevent Snap from burning itself and its users out.
There’s no denying, however, Snapchat has inadvertently tapped into some very powerful psychological realities.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.
