Day: November 17, 2013

Thomas Campbell recently offered his views on a recent article in the Wall Street Journal about SnapChat’s peculiar decision to reject Facebook’s $3 Billion acquisition deal, pointing out that the company has no real revenue stream at all.

It’s important to look at the acquisition from Facebook’s perspective, and try to understand why they would offer such a high price.

It is readily apparent that Facebook’s largest revenue stream comes from advertisement, a service that is very dependant on how the company stores information from its users’ profiles: friends, likes, location. The more information Facebook has on its users, the better the functionality of its advertising service.

Startups like SnapChat pose a threat to Facebook, because their main value proposition is in doing the exact opposite: destroying all content posted in an aim to offer its users a platform without risk; mainly, your parents, employers and friends won’t see the embarrassing SnapChat that was taken of you at that party that one night.

A platform like this, and one gaining popularity at such an intense pace, poses an integral threat to Facebook’s business model, which would perhaps explain why Facebook is so intent on buying them out.

It might also explain why SnapChat is so intent on declining.

https://www.youtube.com/watch?v=NBgKJ5TuILo

I recently had the pleasure of attending a workshop by Lance Saunders, the Executive VP Marketing Director for DDB Canada, during a recent office tour offered to Sauder students.

He started off the workshop with an intimidating statement, claiming that the advertising industry had changed more in the past 7 years than it had in the past 30.

Up until very recently, great advertising has been largely about creating a great story, message, and brand through billboards, prints, and television, that resonate with the consumer enough with the consumer that they would remember it when they are out shopping, and have to decide which product to purchase. While the content may have changed, the channels which these stories were presented did not change. These channels all had a defining characteristic: the consumer could not interact with them.

Yet, this model has slowly been breaking down; old channels are no longer as effective as they used to be. Consumers are spending more time on the internet and on their phones than ever before, and more importantly, nobody really believes advertising anymore.

When a company like McDonald’s has a negative health conception with their brand, releasing an advertisement that says otherwise no longer works, because no one will believe it.

One of DDB’s most successful campaigns (also, see video) ushers in a new era of advertising, digitally interacting directly with consumers honestly, lifting the curtain on questions like “How come big macs look so beautiful in commercials and posters but not as beautiful when you get them from the store?”

Telling a great story no longer works; instead, you have to create a great story, but leave a hole in it for the consumer to fill themselves.