As it prepares for a 2017 IPO that could be the largest in the social media space since Facebook went public in 2012, all eyes are on Snapchat.
But there are signs that Snapchat, which some believe is the biggest threat to Facebook’s social dominance, could be facing headwinds as it looks to build a Facebook-like business on the back of its popularity.
For example, according to  a report published by research firm L2, 62 of the 427 brands it tracks across verticals created a Snapchat account between January and October of 2016, bringing Snapchat’s penetration among this group to 64%.
But according to L2, many of the brands that have logged on to Snapchat “have struggled to produce content for the platform,” something that is reflected in the fact that by October, just 67% of the brand accounts were active, down from 70% in January.
The amount of content brands active on Snapchat are posting to the service has increased slightly. Across all verticals, brands sent 25 Snaps per week on average in October, up from 18 Snaps per week in January.
But as Adweek’s Lauren Johnson notes, “Unlike all of the other major platforms that encourage brands to create their own content, Snapchat’s main pitch for brands has been to pay for ads to run between streams of content created by users and media companies.”
Trying to catch Facebook
Snapchat reportedly aims to achieve nearly $1 billion in revenue this year, but does Snapchat really have the ability to become a platform that is as important to brands as Facebook?
The company is adding new ad formats and functionality, such as deep-linking and auto-fill , but it’s not clear how Snapchat will scale its ad business to Facebook-like proportions. For example, L2’s data shows that following the launch of its ads API, 63 advertisers ran 387 ad campaignsin Snapchat’s Discover section in October, up from 23 advertisers and 161 ads in January.
That’s significant growth, but for comparison, in March of last year, Facebook announced  that it had hit three million active advertisers, and just this month, the company revealed  that its Audience Network now delivers ads to more than a billion people each month.
While Snapchat doesn’t need to become as large as Facebook to be successful, given that much of Facebook’s success in building a huge ad business has been based on luring brands to invest in their Facebook Pages, L2’s data suggests that Snapchat might want to focus on increasing brand engagement on its service.
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