News of Snap’s (fka Snapchat) purported confidential IPO filing hit the press this past week. Although rumors of a pending Snap IPO were swirling for several months, I had been a bit skeptical. After all, why would Snap choose to go public now? The company is still relatively young, having only become a powerful force in the mobile social landscape over the past three years and only generating revenue over the past two years or so. By contrast, Facebook was over five years into revenue before going IPO. Additionally, Snap certainly wouldn’t have trouble raising more private capital at attractive terms and value should it choose to do so.

I’ve been asking around among Snap investors, bankers and IPO experts and have laid out the most likely reasons for Snap’s decision to IPO below.

Why IPO Now?

1. Evan Spiegel Wants an IPO. According to some of the folks I’ve chatted with who know him, Spiegel is driven to IPO because he “just wants to.” For many, an IPO is an integral part of the mythology of success as a founder. Although few would question his success, Spiegel has already turned down multi-billion offers from Facebook and possibly others. A big IPO will help vindicate his decision to remain independent and go it alone.
2. Market Timing Conducive for Content, Mobile & AR. Unlike Facebook, Snap won’t need to go through a mobile transition while public. Facebook navigated this transition well, but the early days were challenging. Snap was born mobile and has shown a propensity for rapid mobile product innovation. Spectacles give us a glance at Snap’s AR/ hardware ambitions as well, and arguably, the company is on near equal footing with Facebook as this market gets going. Snap’s product engine will be a powerful force once the company is public, helping the company gain ground on Facebook. Snap also seems to have more control over stories and community content. While Facebook reels from the “fake news” issue, Snap’s content is unique, timely and more likely real (at least so far). Usage of the platform as a way to get immersive and multi-faceted content from events of interest is clearly growing and is unlike anything Facebook can produce.
3. Reserve Meteoric Growth for Public Domain. Facebook deferred its IPO until revenues were nearing $4B annualized and growth was approximately 50%. While Facebook has performed very well as a public stock, its valuation at IPO was upwards of $100B. Similarly, Uber and Airbnb have deferred their IPOs for now, allowing revenue to scale substantially, suggesting valuations may be significant at such time those companies choose to IPO. By contrast, Snap may be motivated to go public while it's still growing at triple digit rates, reserving hyper-growth for public shareholders and building in lots of upside for its stock price.
4. Notoriety to Help Mainstream Snap. In the Silicon Valley bubble, everyone knows Snap, but in “Trump’s America” and in most of the rest of the world, Snap is still largely a niche service. A hot IPO and strong after-market performance will engender lots of positive PR and expose vast new groups to Snap. Snap’s IPO should produce a “growth dividend,” helping increase penetration into newer segments with low to no user acquisition costs.
5. Employee Dynamics. At Uber, it's well-chronicled that employees who’d like to leave are stuck given the ISO stock option taxation rules and the dramatic appreciation in its stock price. Snap employees would likely have the same problem. While Snap might not care too much about the plight of departing employees, a liquid public market for its stock will make the process much easier for employees in the future.
6. Advantages of Public Versus Private Capital. Snap could easily raise a high priced round of private capital now. That said, Snap may recognize that public capital has advantages. In the current climate, a new private round may come with some investor-friendly terms. In an IPO, Snap can raise common shares, convert all its existing preferred to common and, given the high demand for shares, Spiegel can structure a dual class structure to retain control, similar to Facebook.
7. Global Expansion. Like Facebook, for Snap to achieve its lofty ambitions, it will need to grow globally. With more than 2 billion smart phones outside the US predicted to come online over the next 5–10 years, growth outside the US will be critical. A well executed IPO will give Snap the cash and overseas notoriety it will need to continue international expansion.

User and engagement growth at Snap has been tremendous. Snap will surely be one of the biggest IPO events of the decade. We’ll have to wait to see the S-1 to unpack the financial profile of the company but there are lots of reason for optimism.

While it's possible that Snap’s IPO filing is just a ploy to get Facebook, Google and perhaps the likes of Amazon, Apple, Tencent, Alibaba and Microsoft to counter with an acquisition offer that one can’t refuse, it's far more likely in my judgment that Snap is legitimately on its way to an IPO. No business is perfect and Snap is no exception; prevailing wisdom, for example, is that the company lacks sufficient high value inventory to drive revenue into the billions. But, the Snap IPO promises to be an exciting ride.

Glenn Solomon is a Managing Partner with GGV Capital. Some of his investments include Airbnb, AlienVault, BitSight, Domo, Hashicorp, Nozomi, Opendoor, Nimble Storage, Restless Bandit, Slack, Square, Synack and Zendesk. Follow Glenn on Twitter (@glennsolomon) and on his personal blog.

SEE ALSO: The founding story of Spectacles — how a small glasses startup that struggled to raise money turned into the future of $25 billion Snapchat

Join the conversation about this story »

NOW WATCH: We got our hands on Snapchat's Spectacles — here's what they're like

There's a lot of hype around Snapchat's new Spectacles, a pair of smart glasses that records video of the world from your point of view. 

A lot of the buzz has been because the glasses are so hard to get. So far, Snapchat has only sold a few hundred from a traveling vending machine that pops up, with little notice, in different locations around the US. And there's only one retail location so far — meaning people are waiting hours in line to snag a pair during the limited store hours .

But if you're dying to get your hands on a pair of the sleek sunglasses, here are your four options for how to do it:

SEE ALSO: REVIEW: Snapchat's Spectacles live up to the hype, but have a ways to go

Chase the Snapbot around the country.

This is the cheapest way to pick up a pair, but by far the hardest. 

Snapchat's parent company, Snap Inc., is only selling pairs through a machine called the Snapbot. 

The vending machine is placed in a new location about every 48 hours. A countdown will generally start on the Spectacles website 24 hours before the location is unveiled and there's no clues before then as to where it will drop.

So far, the Snapbot has made surprise appearances in Venice Beach, California; Big Sur, California; Catoosa, Oklahoma; and Santa Monica, California. Its most extreme location was at the bottom of the Grand Canyon — but people still bought helicopter tickets to snag a pair.

You're likely to be guessing blindly at where it will be, so keep an eye on its map as the countdown clock hits zero in case it winds up somewhere near you.

Visit the pop-up store in New York City through New Year's Eve (but be prepared to wait in line).

Called the "Bot House", the pop-up store in that Snap recently opened in New York City is the only one of its kind so far. Lines have wrapped around the block as people have waited hours for the sunglasses. The only thing inside the store is more room to wait in line and a single SnapBot machine for everyone to make their purchase. 

If you want to visit, Spectacles' temporary home is at 5 E 59th St across from the Apple store. The location is open Monday through Friday from 4 p.m. to 10 p.m. and on the weekends from 6 a.m. to 12 p.m. Be careful: The store is closed on holidays though so there's no chance of you picking up a pair on Christmas Eve (12/24) or Christmas Day (12/25).

Pay up on eBay.

Spectacles are a hot eBay item with many bids going into the high hundreds of dollars. If you want to just buy a pair now, the prices range from $900 to $4,500 for sealed and unsealed containers. 

One thing to note: Snap Inc. can't guarantee the authenticity of any pairs purchased outside a Snapbot, so be wary purchasing from a third party.

Something funny happened this Fall.

Snapchat, an internet social messaging company, started selling high-tech sunglasses. Google, a search advertising company, started selling the Pixel phone. And Microsoft, a software company, started selling the Surface Studio PC.

The internet and software giants are suddenly hot for hardware — a high-cost, low-margin business dominated by fierce competitors with years of experience.

That doesn't look like a sound business plan. And indeed, none of these internet companies have given any indication that hardware is the future of their business. 

But hardware has become a necessary cost of doing business — at least temporarily — as these companies scramble to secure their future.

Microsoft, Google and Snapchat all rose to power in the world of PCs and smartphones. PCs are dying and the smartphone boom is already starting to taper off. What comes next is still anyone's guess. And that's a dangerous place to be for all three of these companies. 

What do they want

The major consideration here is pretty basic: What does Google want? What do Snapchat parent Snap, Amazon, Microsoft, or whoever else, want? 

For instance: when Microsoft launched the original Surface tablet, its first-ever piece of computing hardware, it was with a very specific goal. Microsoft knew it would never sell as much as even a similar tablet from Dell, or Lenovo, or whoever else.

Rather, it was intended as a kick in the pants to those same companies. In the hardware business, margins are thin, and R&D tends to go into incremental upgrades rather than revolutionary steps forward. What Microsoft wanted was for those companies to stop making boring old laptops and start looking at touchscreens and styluses.

Ultimately, Microsoft won its big bet. Big companies like Dell and little startups like Eve have come out with their own takes on the Surface, with even Apple following suit. And the market for Surface-like 2-in-1 computers is growing faster than the overall PC business is shrinking.

Microsoft needed more people using Windows, and it used a piece of niche hardware manufactured in-house to achieve that goal. The Surface Studio PC, which is winning attention even from Apple's most die-hard fans, is another page from the same playbook: Use a cool new device to win attention and credibility for the software.

Snaptacles

So what does Google want, or Snapchat? In both cases, the answer is the same, even if their businesses are different.

Snapchat knows as well or better than anybody that its service lives or dies on the basis of whether or not its younger-skewing users still think it's cool. The problem is that Facebook, Snap's perennial rival for the affections of the mythical American teenager, is relentlessly appropriating Snapchat's best features for its own use.

Now, Snapchat has rebranded itself a "camera company," and released its new Spectacles glasses. 

Maybe Facebook could replicate the design of the Spectacles. It wouldn't matter. It can't recreate the hype, or the fact that Spectacles, and Snap's clever product launch, have reaffirmed Snapchat's reputation as the cooler, more fashionable social network.

With its buzz reaffirmed, it would be silly for Snapchat to not at least consider opening its app to camera hardware from other manufacturers. After all, Snapchat's real business is the audience that uses its service and the ads it monetizes that audience with, not the revenue from selling sunglasses. And for other hardware companies, tapping into the Snapchat buzz is one more compelling product feature. 

Pixel perfect

The same goes for Google, with the Pixel.

The headline feature of the phone is the Google Assistant, Google's new virtual personal assistant.

The point of the Pixel isn't to sell a bunch of Pixels (though it wouldn't hurt); it's to demonstrate the power of the company's artificial intelligence assistant, on the Pixel phone and on other hardware devices like Google's new Home smart speaker.

If the Pixel is even a modest hit, it demonstrates the power of Google's AI capabilities to other phone manufacturers, and Google's empire expands further. If customers are expressing demand, it incentivizes Android phone manufacturers to stop stalling and integrate the latest Google tech, faster.

That's important for Google, as Apple and Microsoft alike are both betting big that virtual assistants like their own Siri and Cortana are the next big battleground. Google needs to protect its core search business, and that means conquering the virtual assistant, space, too.

In all of these cases, they're big, but unproven, bets that hardware can drive demand for their software and services. Even Amazon is using its Echo to drive more demand for its retail business.

Ultimately, what we're seeing is a game that's as much psychological as it is sales-driven. The biggest companies in tech need to build excitement for the next big thing in technology, by any means necessary. 

SEE ALSO: Even Microsoft CEO Satya Nadella wants to get his hands on this startup's $1399 Surface Pro-killer

Join the conversation about this story »

NOW WATCH: First thoughts on Snapchat's Spectacles — the sunglasses everyone is going crazy for

If you have poor eyesight, there's no guarantee that you'll be able to get prescription lenses for Snapchat's Spectacles.

The camera-equipped sunglasses are currently the hottest gadget in tech, with hundreds lining up every day to buy a pair from mysterious vending machines throughout the U.S.

But what happens if you wear prescription glasses?

One woman, Sarah Evans, tweeted a video about her experience getting her Spectacles refitted with prescription lenses at LensCrafters.

But they may not be able to do the same for everyone, according to LensCrafters.

"We have fitted a handful of Snapchat spectacles with lenses in our stores, but at this stage, it is really on a case by case basis," a LensCrafters spokesperson told Business Insider. "Ultimately, we need to be sure every lens we create for a frame is done so to the highest standard of quality."

If it can be done, the price depends on the kind of prescription you need, according to LensCrafters.

"Because pricing varies significantly depending on things like the type of prescription (single vision, progressive, etc.) and treatment (UV protection, scratch resistance, anti-reflective coating, etc.), it’s tough to provide an estimated cost," the spokesperson added.

Snapchat parent company Snap Inc. isn't offering any official advice for prescriptions other than recommending that people consult an optician.

SEE ALSO: How Snapchat secretly bought a struggling startup, then bet the future on it

Join the conversation about this story »

NOW WATCH: First thoughts on Snapchat's Spectacles — the sunglasses everyone is going crazy for

Snapchat's Spectacles allow users to record video using a camera built into a pair of sunglasses, and the product is already in high demand, with pairs being resold for exorbitant prices.

We've already heard from the experts on our tech team, but I wanted to find out for myself if they're really worth the retail price of $130.

Follow BI Video:On Twitter

Join the conversation about this story »

Snapchat parent company Snap Inc. wants to create video game-like 3D characters through facial and performance capture, according to nearly a dozen recently posted job listings.

The fast-growing company is looking to hire people with expertise in 3D character animation and game design, including a 3D lighting artist and someone who can "digitally sculpt 3D characters." Building these characters from the ground up will "play an important role in shaping how Snapchat tells visual stories," according to another job description.

The listings hint at secretive Snap's ongoing ambition to be an industry leader in computer vision and augmented reality, which currently powers Snapchat's camera "lenses" and moveable emojis.

They also indicate that Snap is exploring other ways of blending the physical world with the virtual.

A job description for a performance capture specialist says that whoever fills the role will "develop internal and external tools to support the creation of new Snapchat experiences." Performance capture is commonly used by video game and movie makers to create virtual characters based on human actors. 

Yet another open role seeks someone who can model "3D characters, clothing, accessories, and props."

A Snap spokesperson declined to answer Business Insider's questions about the new job listings.

3D Bitmojis?

Beyond its 3D selfie lenses, Snap signaled its interest in creating virtual characters when it acquired Bitstrips, the Canadian startup behind the hugely successful Bitmoji app, for a reported $100 million earlier this year. 

Snapchat users can now send Bitmojis of themselves in messages and the app's paid geofilters. Creating 3D characters could allow Snapchat to eventually let its more than 150 million users interact with more realistic, animated versions of themselves.

The Los Angeles-based startup has been steadily hiring VR and AR experts from its tech competitors and Hollywood too.

This summer it acquired the small team behind an app named Seene, which let users create 3D selfies using computer vision technology. The core team behind its newly released Spectacles camera glasses was working on numerous Google Glass-like augmented reality projects years ago.

More recently, Snapchat added rear camera "World Lenses," which overlay 3D effects over all of your surroundings instead of just your face.

Exactly how Snap plans to use 3D characters remains to be seen, but the company clearly plans on being an industry leader in VR and AR for the foreseeable future.

Know anything more about Snapchat’s plans for augmented reality? Contact this author via email (aheath@businessinsider.com) or on secure messaging app Telegram (@alexeheath). Anonymity guaranteed.

SEE ALSO: How Snapchat secretly bought a struggling startup, then bet the future on it

Join the conversation about this story »

NOW WATCH: A regular guy tests out Snapchat's Spectacles - here's what he thought

On behalf of its clients, ad giant WPP is spending about $70 million (£56 million) with Snapchat, the company's chief executive Martin Sorrell said on Tuesday at the UBS Media and Communications Conference, The Wall Street Journal reports.

The figure is just a pinch of the money it spends on other digital platforms — in October Sorrell said WPP will spend $5 billion (£4 billion) with Google this year, up from $4 billion (£3.2 billion) in 2015. That year the company spent $1 billion (£800 million) with Facebook.

At the conference, Sorrell also said that WPP will continue to increase its spending with Facebook, which has been "trying to undermine Snapchat."

The $70 million represents a sizeable chunk of Snapchat's total ad revenues: its parent company Snap Inc., which is currently preparing for an IPO, told investors that it expects to make $250 million to $350 million in advertising revenue this year.

That figure could grow to almost $1 billion (£795 million) by 2017 according to analysts at eMarketer, TechCrunch reported: " a jump it [eMarketer] attributes to Snapchat’s ability to reach younger millennials, a wider ad portfolio, and ad targeting improvements."

It's not clear whether Snap is profitable. Its main business is advertising in the Snapchat app, which more than 150 million daily users. But Snap recently rebranded itself as a camera company and started selling camera-equipped sunglasses called Spectacles

SEE ALSO: Facebook is surveying users about the news it shows them

Join the conversation about this story »

NOW WATCH: Watch the Air Force drop 8 armored Humvees out of a plane from 5,000 feet

More exclusive TV shows are coming to Snapchat.

Turner and Snapchat parent company Snap Inc. announced a partnership on Wednesday that will bring original shows from the likes of Turner-owned channels TBS, Adult Swim, CNN, and others directly to Snapchat's Discover section.

The Bleacher Report, which Turner also owns, will have its own Discover channel in the U.S. for daily sports coverage starting January 4.

Wednesday's partnership comes on the heels of a deal Snap and Turner inked earlier this year to show March Madness clips in Snapchat's Live Stories format, which stitches together user-submitted videos alongside professional coverage of live events.

"Millions of Snapchatters value the authoritative and credible reporting by CNN and Bleacher Report every day and we are excited about offering more frequent news updates and expanding Bleacher Report's Discover coverage to the U.S.," Snap VP of content Nick Bell said in a statement. “We’re also thrilled to be building on two years of our Live Story coverage of March Madness with expanded sports content.”

Snap announced a similar partnership with NBC in August to develop Snapchat-specific episodes of some of its hit shows, including "The Voice", "Saturday Night Live", and "The Tonight Show With Jimmy Fallon." The app has also aired exclusive mini-shows from MTV and PBS.

Partnering with Turner is the latest example of how Snapchat wants to become the “de facto news outlet” for its millennial audience. The Los Angeles-based company has been hiring producers and writers to help pitch and create original shows for the app, which has more than 150 million daily users.

SEE ALSO: Get ready for Snapchat to feel a lot more like TV

Join the conversation about this story »

NOW WATCH: Teens reveal their favorite apps and the winner is clear

Henry Blodget, the global editor-in-chief and CEO of Business Insider, presents the future of digital media at this year's IGNITION conference.

This presentation was put together with the help of the BI Intelligence team. BI Intelligence is a new research and analysis service focused on mobile computing and the internet. Please sign up for a trial membership here.

Join the conversation about this story »

Facebook is taking yet another page out of Snapchat's playbook by letting people create their own location-based camera filters.

Starting Thursday, Facebook users in select countries will be able to make custom camera "frames" that others can overlay over photos and add to their profile pictures. The frames will also be available in Facebook's Snapchat-like camera messaging interface that's currently being tested in Ireland.

Facebook's camera frames work almost identically to Snapchat's geofilters, a competing app that Facebook has already begun to clone aspects of in Instagram, Messenger, and WhatsApp.

The new feature is also part of a broader effort by Facebook to encourage more visual communication through photos and videos, an idea that Snapchat pioneered with its camera-centric design.

Through a new web tool on Facebook's website, people in Colombia, Mexico, Taiwan, the U.K., and Ireland will be able to upload frames they've designed for things like events, neighborhoods, and landmarks.

Frames can be seen by everyone near an area if they are tied to a certain Facebook page with a location, like a restaurant or small business. If someone who doesn't own a Facebook page creates a frame, only their friends will see it in the Facebook app when they're near its associated location.

Facebook employees will review each submitted frame to make sure it's not offensive or illegal, according to a company spokesperson. Snapchat employees also review submitted geofilters to make sure they follow company guidelines.

Facebook frequently tests new features in smaller markets before making them available in bigger countries like the United States. Camera frames could eventually become a way for Facebook to make money if the company chooses to start charging for them like Snapchat has done.

SEE ALSO: Facebook is finally getting serious about its Snapchat problem

Join the conversation about this story »

NOW WATCH: How to make your own personalized Snapchat geofilter

Do you enjoy physically taxing activities like crawling, jumping, and bending?

Do you have a permit to pack a concealed firearm?

And have you been looking for the chance get in on the hottest internet IPO since Facebook?

If so, Snap, the parent company of Snapchat, has some exciting opportunities for you.

The maker of the fast-growing social app, which is preparing for a $25 billion Wall Street debut in early 2017, is hiring nearly 200 new employees.

In addition to the engineers and salespeople it's hiring, Snapchat is looking to beef up its security team. That’s not in itself unusual for a successful corporation, but a close look at the job descriptions on Snapchat’s website make a stint at the company sound more like a grueling military boot camp than a tech startup.

A “Residential Security Officer” job listing seeks someone with the ability to walk up to 5 miles per shift, to lead patrols and inspections, as well as possessing first-aid skills.  The ideal candidate must have:

• Permits to carry a firearm
• Ability to provide protective coverage during physically taxing activities (running, jumping, crawling, bending, lifting, etc.)
• 3+ years experience in the military, law enforcement, or a public/private sector security organizationn

Another listing for a “Residential Security Driver” describes what sounds like a combination of affable Downtown Abbey wheelman Tom Branson and '70s TV super detective Tom Magnum.

The future employee will chauffeur “important individuals,” including executives, family members, and colleagues between the company’s Venice Beach headquarters, private residences, and various local areas. In addition to passing a background and driving record check, the driver must come strapped — in this case, Snap specifies that the requisite gun permit must be for a concealed firearm.

Finally, Snapchat notes that its gun-toting driver should be comfortable working in a “family-friendly environment.”

A watchman's jackpot

While security personnel is standard at all tech companies, none of the security-related job postings Business Insider has viewed at companies like Google and Facebook list weapons in the job description requirements. To be fair, Google and Facebook typically list more senior, director-level security positions on their sites, whereas the Snapchat jobs referred to here seem to be for rank-and-file recruits that would be more likely to require a weapon.

Snapchat would not comment on its security procedures or on its compensation packages. But assuming these security officers are even one-tenth as handsomely rewarded as their computer coding colleagues, the guards could be looking at some very in-demand Snapchat stock options or RSUs, months before the company’s highly-anticipated IPO.

Google’s IPO famously made the company's masseuse a multi-millionaire; Facebook’s IPO delivered a $200 million windfall to the financially astute graffiti artist who painted the company headquarters; When Snapchat's IPO occurs, the security officers with guns may be the ones laughing all the way to the bank.

SEE ALSO: What it’s like to work at Snapchat, one of the most secretive companies in tech

Join the conversation about this story »

NOW WATCH: 7 places you can’t find on Google Maps

This story was delivered to BI Intelligence "Digital Media Briefing" subscribers. To learn more and subscribe, please click here.

Facebook has made more progress along its Snapchat-based product roadmap – this time by launching a tool for users to overlay custom camera frames (or geofilters in Snapchat’s parlance) onto their photos, TechCrunch reports.

This tool can be found on Facebook’s new Camera Effects platform, which bears a striking, but unsurprising, resemblance to Snapchat's On-Demand Geofilters site. Camera Effects is now available in Colombia, Mexico, Taiwan, the UK and Ireland.

This is Facebook’s latest step in its quest to make the camera a more central part of its platform. In its most recent earnings report, CEO Mark Zuckerberg said that Facebook was focused on enhancing the photo and video experience on both the consumption and the production side. Shortly before this, Facebook began testing a new camera that can be accessed from the News Feed with a single swipe, and that features animated selfie masks, overlaid graphics and geofilters.

Camera Effects, and the new camera, improves the production side of Facebook’s photo experience, as it gives users greater creative freedom to capture and edit their shots. These developments play into Facebook’s strategy in a couple ways:

• Unlocking new revenue opportunities. Camera Effects opens new avenues for Facebook to collect revenue by charging users for submitting custom photo frames, or by opening it up to brands as a new advertising format. Using frames to expand ad inventory could prove fruitful in light of Facebook’s admission that it’s about to hit a plateau on its ad load (the number of ads Facebook can serve to users).
• Threatening Snapchat’s uniqueness. Every page adopted by Facebook from Snapchat’s playbook de-emphasizes the differentiation of the ephemeral messaging platform. This has negative impacts for Snapchat on both the user and brand perspective. Users become may become less inclined to spend time in the app, while brands could opt to take their marketing budgets to Facebook, which already has a more sophisticated ad tech stack than Snapchat.

Dollars are increasingly flowing from traditional ads to digital, as strong growth in mobile, video, and social spending continue to change the face of the US media market.

Over the next five years, marketers will especially embrace mobile. Mobile will drive up spending on video, search, display, and social, and propel the migration of ad dollars away from traditional media, including newspapers and magazines.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report that forecasts spending trends for the major digital ad formats — including search, display, and video — and mobile vs. desktop. It also examines trajectories for social ad spending and programmatic ad buying, which cut across digital formats. Finally, the report looks at how spending on traditional media formats will grow or contract over the next five years, as digital, and particularly mobile, rises.

Here are some of the key takeaways from the report:

• Mobile will be the fastest-growing advertising channel and buoy spending on each of the digital formats. US mobile ad revenue will rise by a 26.5% CAGR through of 2020.
• Digital video ad spending is rising faster than search and display. US digital video ad revenue will rise by a CAGR of 21.9% through 2020.
• Mobile search will overtake desktop search ad revenue by 2019. Mobile search ad spend will rise by a 25.2% CAGR, while desktop search ad revenue will decline during the same period.
• Mobile display ads, including banners, rich media, and sponsorships, will overtake desktop display-related spending even earlier, in 2017.
• Social media ads, which cut across display and video, are seeing fast adoption. US social media ad revenue, which includes video and display ads, will grow by a CAGR of 14.9% through 2020.
• The rapid embrace of programmatic ad-buying tools is fueling a dramatic uptick in the share of digital ad spending coming through programmatic channels. Programmatic transactions will be a majority of total US digital ad spend this year.
• Unlike digital, traditional ad revenue will remain flat overall through 2020. Total traditional ad revenue will rise by a CAGR of just 0.4% between 2015 and 2020.

In full, the report:

• Forecasts ad revenue for emerging digital ad channels and formats like mobile, video, social and programmatic over the next five years
• Explores why ad revenue is flowing from desktop to mobile
• Examines the stagnation of traditional advertising channels like TV, magazines, and newspapers

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the digital media advertising.

Join the conversation about this story »

Snapchat has finally added the ability to chat in groups — a feature that's been highly requested for a long time.

Like regular messages in Snapchat, group chats are only visible for 24 hours before they disappear. You'll be able to replay any photo or video in a group thread once before it vanishes. Up to 16 people can be added to one group.

Snapchat is adding three more features alongside group chatting in an app update on Monday: a scissors tool that turns part of a photo you take into a digital sticker, a paintbrush tool that creates an artistic filter over a photo or video, and Shazam integration for recognizing music playing around you while you record video.

Here's a GIF of Snapchat's group chatting in action:

SEE ALSO: Facebook is copying Snapchat's geofilters by letting people make their own camera 'frames'

Join the conversation about this story »

NOW WATCH: A regular guy tests out Snapchat's Spectacles - here's what he thought

This story was delivered to BI Intelligence "Digital Media Briefing" subscribers. To learn more and subscribe, please click here.

The latest Snapchat update should give Facebook and Instagram a couple new ideas.

Among the new features in the Snapchat app are a native integration with the popular media-identification app Shazam, and new creative tools for users to edit their Snaps.

The platform also debuted a long-awaited group chat feature – in this respect, Snapchat was decidedly behind the curve set by some of Facebook’s messaging apps.

This triad of new features represent a broadening of Snapchat’s platform. The Shazam partnership is particularly interesting since it gives an inkling into Snapchat’s ability to house third-party apps in its platform – an important attribute as it strives to grow a garden to match Facebook. These three new features and their impact are analyzed below:

• Chat in Groups of 16. Snapchat finally rolled out a group chat feature to let users chat with up to 16 friends. Users can create and name groups, invite friends and, in true Snapchat fashion, conversations will be kept for 24 hours. Strengthening Snapchat’s messaging capabilities makes the app more sticky in lieu of other apps like Messenger, WhatsApp, Kik, Line, etc. that offer group chat functions. This will boost Snapchat as a go-to communication tool, particularly among younger users.
• Shazam integration. Users can now use Snapchat to Shazam by holding down on the camera screen when music or other media is playing nearby. Once the media is identified, users can engage with Shazam content and share song discoveries as Snaps to friends. This provides yet another use case to keep Snapchat top of mind, and users inside the platform. A Shazam partnership could also yield immense data in terms of audio-recognition, and help build a reservoir of users’ music preferences.
• New creative tools. Paintbrush and Scissors are two new tools for editing Snaps that launched this week. Paintbrush lets users draw and apply filters to photos saved in Memories. In some ways it’s similar to Instagram’s filters, but with an emphasis on kitsch art rather than scenic perfection. With Scissors, users can select a snippet of a Snap and save it as a sticker in the app’s sticker drawer. This tool is particularly noteworthy in the way that it opens new avenues for creativity and self-expression on the platform.

Mobile-app makers and content creators are vying for consumer attention in a crowded and noisy market.

Even if an app can stand out enough to prompt a consumer to download it from among a list of millions, it then faces the challenge of enticing him or her to use it enough times to recuperate development, maintenance, and marketing costs. To make matters worse, those marketing costs have hit record-high levels over the past year as discoverability has become more challenging.

And while consumers are spending more time in apps, most of that time is spent in a few favorites. Consumers spend almost three-quarters of their total smartphone app time in just their three favorite apps, according to comScore. 

But it's not all doom and gloom: There are numerous tools at a publisher's disposal to engage and re-engage consumers, and there are new products and solutions coming to market that can help alleviate some of the issues around this app engagement crisis.

Jessica Smith, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on app engagement that explores the current state of the app market, the issues around engaging consumers, and the tools at a publisher's disposal. It also identifies best practices for the implementation of some app engagement tools, and presents the pitfalls that some publishers fall into in this pursuit. 

Here are some key takeaways from the report:

• The app market today is challenging and volatile. It's difficult to stand out, and most apps have to be offered for free in order to entice consumers who have too much supply to choose from. This puts greater emphasis on engaging consumers after they've downloaded an app in order to recoup costs. 
• Consumers are more difficult to engage today, as most have dozens of apps installed on their devices yet spend most of their time in just a select handful of favorites. 
• There are numerous solutions at hand for mobile app publishers and content creators seeking to engage consumers. Push notifications, in-app messaging, and app message centers with badges are three tools publishers can use to engage consumers. 
• While many publishers mistakenly rely solely on push notifications for app engagements, this is a poor practice because many consumers don't allow push notifications and those that do can easily be overwhelmed when they receive too many. 
• The best solution often includes leveraging two or three of these tools to engage consumers with the right message at the right time. The technology in this market has grown increasingly sophisticated, and publishers that don't diversify their approach run the risk of annoying their consumers to the point of abandonment. 
• There are emerging engagement technologies that will change the current app engagement norms and present new ways for app publishers to communicate with users. The mobile ecosystem is changing quickly as technology improves and consumers become more comfortable conducting more activities on mobile devices.

In full, the report:

• Identifies the major challenges in today's app market and explains why employing good app engagement practices is more important than ever before.
• Presents the major app engagement tools currently available.
• Examines the pros and cons of each app engagement tool while outlining some pitfalls that publishers encounter in implementing them. 
• Prescribes best practices for adopting various app engagement tools or strategies. 
• Assesses how the market will likely change over the next five years as emerging technologies change both consumer behavior with mobile devices and introduce new tools with which to engage consumers. 

Interested in getting the full report? Here are two ways to access it:

1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. »Learn More Now
2. Purchase & download the full report from our research store. » Purchase & Download Now

Join the conversation about this story »

The INSIDER Summary:

• Snapstreaks tell you how many consecutive days you've chatted with someone on Snapchat. 
• For many teenagers, it's a way of quantifying friendships.
• The number is totally useless, but is a way to keep people using the app.

When it comes to maintaining friendships, teens don't text.

Snapchat is the most popular platform among teenagers. It's a place to post pictures and videos, but teens mainly use it as a communication tool.

One of the ways that Snapchat keeps its users engaged is by assigning each conversation a Snapstreak. It's a number that appears next to a friend's name, and it indicates how many consecutive days you two have sent snaps to each other.

So if you and someone else sent snaps to each other for 226 consecutive days, the 226 number next to that person's name is that conversation's Snapstreak.

When your Snapstreak starts, a fire emoji shows up next to the number, and other emojis are added based on the length of the conversation. And when it's about to end, Snapchat warns you with an hourglass emoji.

These Snapstreaks keep score of teenagers' friendships.

Because teenagers use Snapchat so much, Snapstreaks are emerging as a way of quantifying a friendship. If you're friends with someone, you want that reflected in a high Snapstreak.

"I wouldn't want to have a Snapchat streak with someone I didn't know," Eve, a freshman at The New School, told INSIDER (over Facebook, not Snapchat). "At the same time I would want to have a streak with my friend, I guess because that means that you're in semi-constant communication with them."

Snapstreaks aren't the only number Snapchat offers. Users also get a Snapchat score, which is roughly the sum total of all snaps sent and received, and you can also see how many people viewed each snap in your story.

But of the dozen or so teens INSIDER heard from, the most important number — by far — is your Snapstreak with someone else. Eve said that friends bother her about keeping up a streak.

In a sense, the Snapstreak has become a tool that evaluates teens' friendships.

"I've definitely heard people use Snapchat streaks as a kind of measurement for how close they are with someone," Eve said. "For example: if someone's name comes up in a conversation, I've heard people say things like 'oh yeah, I love her, we have a 200 day Snapchat streak.'"

There's a lot of social pressure to keep up a Snapstreak.

If someone doesn't respond to a snap within a 24 hour period, the streak is broken. For some teens, that's a mortal sin.

"I wanna raise my streaks," Joselyn, a high school junior, told INSIDER via text message. "It's a big deal when a friend breaks a streak [...] whenever a person breaks a streak I get mad because it actually takes time [to] get the numbers."

Meanwhile, other teenagers find the emphasis on Snapstreaks so annoying that they want to swear off the app altogether — if only they weren't obligated to use it.

"I hate streaks because it forces you to be on your phone every day," Sam, a high school freshman, said at Business Insider's IGNITION conference. "Say you have a 100-day streak. There's a lot of obligation to continue. So if you lose your streak, it's like the world's over."

Chatting with friends and keeping up Snapstreaks are sometimes the main reason people use Snapchat in the first place, comparing their scores with other friends. It's much more important than having a Story on Snapchat. But paradoxically, it can also lead to sending and getting more pointless, spammy messages to each other.

"In my opinion, it's the main reason for Snapchat," Jayleen, a high school junior, wrote an in email. "Sometimes it could get annoying when people send you pointless snaps."

Are Snapstreaks unethical?

Snapstreaks are a good example of what ex-Google design ethicist Tristan Harris calls unethical app design.

Unethical designs, according to Harris, exploit psychological vulnerabilities to influence what users do without realizing it.

My colleague Kif Leswing offered another Snapchat feature, the Snapchat score, as an example of unethical app design. It quantifies your Snapchat use into a single number. The feature serves only one purpose: to get you to use Snapchat more. It has no other use. And it's particularly pernicious because young people are Snapchat's main demographic.

For whatever reason, the teenagers I talked to don't seem to care about Snapchat scores. But they do care about Snapstreaks, which are similarly useless. They don't do anything other than get you to use Snapchat more. Like Jayleen said, it's "the main reason for Snapchat."

In some ways, these Snapstreaks are meaningless internet points that users can accumulate. But when teenagers feel forced to use the app every day to keep up with friendships, or when they get upset at friends for breaking Snapstreaks, maybe that's a problem.

SEE ALSO: This chart shows how good Netflix is at making shows compared to rivals like HBO

Join the conversation about this story »

NOW WATCH: The 3 worst things you do when you wash your face — according to a dermatologist

Snapchat is on the hunt for a wide range of hardware acquisitions, as it seeks to further its new mission of creating cameras that can capture a wealth of pictures and videos and funnel them into its social networks.

Over the past year or so, the company looked at a number of startups building drones, wearable cameras, and augmented reality/virtual reality applications, according to multiple sources familiar with its M&A strategy.

For example, Snap Inc. has talked with Berkeley-based drone company, Lily Robotics, over the last few months. No deal is on the table, according to multiple people familiar with the matter, but that doesn't mean it's ruled out in the future either. 

Snapchat also talked with wearable camera company Narrative about an acquisition, according to other people familiar with the situation. The talks also fell through with the Sweden-based company, which briefly shut down its operations before recently starting up again. 

Both deal talks point to the newly-rebranded company's investment in its new mission statement: "Snap Inc. is a camera company."

Snap released its first hardware product, sunglasses equipped with a video camera, in November. The $129 Spectacles allow the wearer to capture short video snippets which can be easily uploaded to the Snapchat service and shared with friends. That product was the result of a 2014 acquisition of Vergence Labs.

Vergence had also been working on a gesture-controlled drone before it was acquired by Snapchat. Drones represent a particularly intriguing possibility for Snapchat.

The selfie problem

Lily Robotics could potentially solve Snap's obsession with the selfie problem. According to sources familiar with Snap's ambitions, it's trying to find different ways for consumers to take selfies that don't require someone holding a camera in hand. Lily's drone, for example, can be thrown into the air and automatically tracks and follows its owner, shooting video. That could be especially handy for sports, like snowboarding or surfing, where a drone can capture the footage while a person is in action. Lily Robotics and Narrative did not respond to request for comment from Business Insider. Snap declined comment.

And the company isn't only interested in small cameras — Snapchat has apparently met most of the major augmented reality or virtual reality startups, including ones focused on building cameras to enhance virtual realities. As one early stage investor put it: every VR or AR startup the investor met with had already talked to Snapchat six months earlier.

Still, Snap's acquisitions happen in secret so if it has purchased a drone or wearable company the news hasn't been released. Only seven purchases have leaked in the press — and some only because of the giant Sony hack in 2014 that exposed Snap board member Michael Lynton's email. 

Yet, the secretive company is clearly regularly engaged in talks with startups about acquisitions and acqui-hires throughout many industries. As the company prepares for a $25 billion IPO in 2017, its dealmaking will increasingly be in the spotlight.

If you have information about Snap Inc's deal talks or acquisitions, message the reporter securely on Confide at bcarson@businessinsider.com.

SEE ALSO: How Snapchat secretly bought a struggling startup, then bet the future on it

Join the conversation about this story »

NOW WATCH: A regular guy tests out Snapchat's Spectacles - here's what he thought

Citi is taking a different tack when it comes to recruiting young talent.

The Wall Street firm is using Snap Spectacles — the sunglasses made by Snapchat's parent company with miniature cameras used to record video — to show candidates what life at Citi might look like.

"What we really loved about this concept is it allowed people to get a bird's eye view to see new interactions and follow someone around as they do their job," said Courtney Storz, head of global campus recruitment and program management at Citi.

The first set of videos will showcase a "day in the life" of a junior employee, like a banking analyst in London or a tech intern in New York.

The firm collected 14 pairs of Spectacles — which cost $130 each and are in very high demand — over the course of three trips to a New York City pop-up store. Because there are limits on how many pairs one person can buy, it took two members of Citi's social media team, plus one member's parents, to collect the 14 pairs. They've now been distributed to Citi's five regions around the world.

The first video debuted last week, with Marilyn McDonald, Citi's head of digital product management, showcasing a day in her life. While Citi does not have a Snapchat account, the videos will be downloaded and posted on Facebook, Twitter, Instagram, and Glassdoor.

"A lot of folks who are interested in technology or technology-type opportunities post-graduation aren't necessarily thinking about financial services," Storz said. "If you could spend some time following a tech analyst who is working in the cybersecurity division, which is very fascinating, you might think very differently about your prospects at Citi."

Banks across Wall Street have had a tougher time recruiting top young talent in the years since the financial crisis. They've found increasingly creative ways to rebrand in an effort to become desirable workplaces for bright college graduates. Citi, for example, announced in March that some junior staff will have the opportunity to take a year off and do charitable work while still earning 60% of their pay.

"Over the course of the past several hiring cycles and really coming out of the financial crisis, there are so many different opportunities for bright students right now," Storz said. "There's a much broader landscape and playing field today than, obviously, there was several years ago."

She said she's noticed an uptick in interest among college grads in the past year or so, however.

While Citi is the first bulge bracket bank to use Spectacles for recruiting, it is certainly not the first to turn to Snapchat as a means of getting closer to millennials.

Goldman Sachs and JPMorgan have both launched advertising and campus recruiting campaigns using the social media platform.

SEE ALSO: We asked a bunch of top bankers what to expect for Wall Street in 2017

Join the conversation about this story »

NOW WATCH: The US is $19.9 trillion in debt — here are the countries we owe the most

The most desirable gadgets this Christmas aren't easy to find. 

At this point, scoring a pair of AirPods or an NES Classic for your loved ones will be a long shot. 

This season, some of the most interesting electronics — from companies like Nintendo, Snap and Apple — will be hard to buy, in short supply, and will require queueing up before stores open, or getting into an Ebay bidding war.

Here are the three electronics gadgets that you probably won't be able to find this Christmas — except on Ebay:

SEE ALSO: Nintendo just released a brand-new $60 game system — here's what we know

Snapchat Spectacles

Retail price: $129

Ebay price: $200+

Snap, the parent company of Snapchat, started to roll out its new face computer a few months ago.

The Spectacles are super fun. They're well-designed, stylish, and because they're so rare, they attract attention. A camera mounted on the sunglasses takes short videos from a first-person view that will certainly get attention on Snapchat. 

They're also very hard to get a hold of. Unless you're in New York, Snap is only selling them through a few vending machines that move to different random location every other day. 

The vending machine has made appearances in all over the country, but your best bet is to line up for them in New York. Machines near Central Park are spitting out a few hundred of the camera glasses per day. 

They retail for $129, but you can get a pair on Ebay for about $200 or more.

Apple AirPods

Retail price: $159

Ebay price: $220

In September, Apple debuted AirPods, a new set of wireless earbuds that pair instantaneously with Apple products and look like an iconic pair of the Apple EarPods with their cords cut off.

They finally went on sale in December. But they're in very short supply. If you order them now, Apple won't deliver a pair until 2017. 

So if you want to give a pair for Christmas, you'll have to find an Apple Store with stock. But most stores seem to be selling out as soon as they arrive. Apple said it will continually restock its stores. 

Or, you could skip the lines, and order a pair from Ebay for immediate delivery. Apple charges $159, but they're going anywhere from $200 to $300 on Ebay. 

Nintendo NES Classic Edition

Retail price: $60

Ebay price: $175+

A great gift for Nintendo fans or gamers is the NES Classic Edition. It might just be a perfect gift for adults who want to replay the classic games they played as children. 

Maybe nostalgia is the reason that people on Ebay are paying $200 or more for the $60 console, which is hard to find. When a batch of NES Classics went on sale on Amazon earlier this month, the demand crashed the product page.

The pocket-sized NES is basically a modern computer that does nothing but look like the original Nintendo Entertainment System, which first launched in 1985, and emulate its games. But it plugs in to your flatscreen with HDMI, and it can play 30 classic NES games, including "Final Fantasy," all three "Super Mario Bros.," and the "Legend of Zelda." It even comes with a cute modern version of the classic NES controller.

If you'd like to get your hands on one at its retail price, retailers like Best Buy are announcing new stock from time to time. You'll have to line up before the stores open, though. 

My sister is 14 years old — and constantly glued to her phone.

She and I are both iPhone users, but the apps I can't live without don't seem to demand the same kind of time commitment as hers do. 

The apps my sister uses are all about communication. While Venmo, Google Maps and the Chase app are super important to me, my 14-year-old sister is far less concerned with convenience and far more concerned with getting in touch with people. 

Here are the apps this particular teenager — and many others like her — can't live without. 

SEE ALSO: The 11 iPhone apps I can't live without

Snapchat

Ever since Snapchat launched its streaks feature, having long streaks has gotten so important that my sister is constantly Snapchatting to maintain her streaks. Texting through the Snapchat app is also a popular option, especially since the messages disappear. My sister claims Snapchat is a great way to keep up with friends, especially her camp friends that live far away. Not only that, Snapchat's "Discover" page is her primary news source. 

FaceTime

Gone are the days of memorizing your best friend's phone number or racing to the ringing home phone before your parents could pick it up. It's all about FaceTime now and my sister seems to constantly talk to people on it. In fact, for a short amount of time, our Apple IDs got mixed up and my phone was blowing up with my sister's friends trying to contact her via FaceTime. She's a big fan of the app and claims she uses it to "study" with her friends. 

Facebook/Messenger

When my sister started high school back in September, she quickly learned she had to get on Facebook. But for her, it has nothing to do with posting pictures or status updates. My sister is on Facebook because many of the clubs she is part of, including Model United Nations and the high school newspaper, use Facebook and Facebook Messenger to communicate information about deadlines and meeting times. 

In 2016, we chased down Pokémon in the streets and braved long lines in the cold to buy sunglasses that can record our every move. There were a lot of hot new tech products announced this year, including a new iPhone, but only a select few really got everyone talking. Here's a look at some of the hottest and most innovative new gadgets and games.

Follow Tech Insider:On Facebook

Join the conversation about this story »