What the Snapchat IPO means for Asia

Snap, Crackle and Pop. And pop in a big way! On March 2, Snap, the parent company to social media darling Snapchat finally went public, listing on the NYSE and making it the largest IPO since Alibaba back in 2014. Snapchat is now valued at a whopping USD 34.7 billion as it closed their first day of trading up 44 per cent.

Snap’s valuation puts it at a similar size as Marriott, an almost 100-year old company. It dwarfs Twitter who currently stands with an USD 11 billion valuation, however, pales in comparison to Facebook with USD 395 billion.

So the big questions now for Snap is where to put all this cash? And for us in Asia, what’s the impact we’ll see in this region?

I would venture they’ll use its stockpile to focus on two immediate areas: 1) rapid expansion overseas and 2) rampant product development – both of which will have a big impact on Asia, a largely emergent region for them.

Snapchat has slowly been gaining popularity in Asia. It effectively doubled its user-base between 2014 and 2015, and now boasts a reach of 15 per cent of total internet users here, according to a 2016 report by TNS.

Snapchat’s penetration is highest in Hong Kong where it reaches a staggering 46 per cent of internet users. Also in markets like Singapore, Malaysia, New Zealand and Australia, TNS reports that about one in three connected consumers are actively sending photos on Snapchat.

A lot of this growth is heavily fuelled by millennials. A segment that has already fuelled skyrocket-like growth of other top social platforms like Facebook, Instagram and LINE, all of which command a strong position in this region. This makes sense, as Asia is home to almost 60 per cent of the global millennial population, so one would expect a lot more growth to come from this segment.

In January, as part of their expansion efforts, Snap opened its first International office in London. And it would be safe to say further expansions are in the works and one would peg Singapore as a key contender for its APAC operation. Also looking at sheer market-size and social proclivity of countries like India, Korea and Japan, I would venture a potential presence could be in the cards there as well.

And setting up shop in these markets could also help combat the growth of local competitors, which has been on the rise.

Live in India right now, Hike, an Indian clone to Snapchat received a USD 175M investment from China’s Tencent last year, pushing up Hike’s valuation to over USD 1 billion. In 2016 Hike introduced a few Snap-like product releases which included Stories, a new camera design and live filters.

Currently, Hike claims 100 million downloads in India and is differentiating it’s proposition by pushing more localized content, providing India-specific filters and is partnering up with local celebrities to boost its adoption, which are all proving to be successful for the app.

Similarly, Korean-born Snow is starting to really take off in Korea, Japan and China. Snow focuses mainly on Asian consumers and localizes its content and filters in an Asian context, for example, allowing its users to add images of Korean pop stars, sumo wrestlers and more. This view towards localisation has helped it drive over 30 million downloads since its debut in Sept 2016.

In China, they are seeing significant growth among the country’s population of over 700 million internet users. This puts Snow at a major advantage as Snapchat is currently blocked in China.

With the success of Snap-like clones such as Hike and Snow, clearly there is a sizable appetite in Asia for these types of services, paving the way for Snapchat to surely step up its game. Also, with the millennial segment being the largest within this region, this makes another compelling reason for Snap to make Asia a big part of its growth story.

Over the next year, my prediction is for Snapchat to use its inventory of cash to launch three offices across Asia, build out a region development team here and start looking to push out more localised content and features specifically catering to Asian consumers in the context in which they live in.

Overall, I am bullish on Snapchat’s expansion across the region and I believe brands are queuing up to explore what innovative partnerships they can create to capture the growing youth audience segment that is so prevalent and coveted in this region.

The post What the Snapchat IPO means for Asia appeared first on Digital Market Asia.

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Lars is Google’s Head of Marketing across Singapore, Malaysia, Pakistan, Bangladesh and Sri Lanka. With nearly two decades of international experience in the Internet and media industry, his passion lies at the intersection of technology and marketing. His career spans across the globe - from Europe to the emerging markets in Asia - from early stage start-ups to large organizations, providing him with an in-depth understanding of marketing, sales and business development across cultures and industries. In his current role he is responsible for local B2B and B2C brand and product marketing across all Google and Youtube services and devices.

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