Last week, Snap Inc. (NYSE:SNAP) officially allowed a handful of college newspaper publishers to bring their publications to the company's Snapchat app. The publications will be located in the Discover section of the app, which marks the first time that anyone besides major publishers can create content for the Discover section.
Snap said in a press release:
We are partnering with dozens of colleges and universities, whose editorial teams will begin producing weekly Publisher Stories and distributing them on Snapchat. These Stories will feature Snap Ads to help each school monetize and grow their newspaper through a revenue sharing agreement.
So, why add college newspapers? The papers are a way for Snapchat's parent company to continually target the company's core millennial demographic. About 36% of its 173 million users are age 18 to 24, and by adding more college content, the company hopes to offer its core users something other social media and messaging apps can't provide.
Snapchat's college angle
Snap's been testing out the college newspaper idea with a handful of colleges and is launching it with dozens of schools initially, with the assumption that it'll expand to others in the near future. The content will be location-specific, so Snapchat users will only be able to view it when people are on campus or within a few blocks of the school (though QR codes can also be used to directly view the content as well).
This idea isn't a slam-dunk for the company, but it does make a lot of sense. Snapchat users younger than 25 spent an average of 42 minutes on the app every single day in the second quarter of 2017 (up from 33 minutes in the fourth quarter 2016), and adding stories that are specific to the school they're attending could encourage users to spend even more time on the app.
This isn't going to fix Snap's problems
Snap is wisely trying to build on its current success with younger people by offering college newspaper content; unfortunately, the company is in need of something far more drastic. Snapchat's daily active users grew by a pitiful 4% sequentially in the latest quarter, and a recent report by SensorTower showed that Snapchat app downloads have fallen by 22% year over year. To make matters worse, recent reporting from CNBC indicated that advertisers are cooling on Snapchat's platform and were looking instead to spend money on Facebook, Twitter, Instagram, and YouTube.
Snap's share price is down about 38% since its IPO earlier this year as investors have lost confidence in the company's ability to grow its user base and woo advertisers. Investors can put up with slow growth if the company is profitable, or fast growth without profits -- but they usually won't stick around if the company doesn't have either.
Snap said it will share video ad revenue with colleges, but investors should remember this new opportunity just launched -- and with a limited rollout -- so there isn't much potential for college papers to bring in significant revenue for Snap right now. Investors should instead see this as an incremental move for the company as it tries to build its publisher and advertiser list.