Twitter's Chief Financial Officer privately communicates with Snapchat's CEO, disclosing internal information about Facebook
In April 2014, Anthony Noto, former co-head of global tech, media, and telecom investment banking at Goldman Sachs, sent an email to Snapchat CEO Evan Spiegel. The email, which has since been made public, analysed Facebook's mobile monetization strategy and its implications for Snapchat.
At the time, Facebook was witnessing a rapid growth in revenue per impression, albeit a 17% decline in the number of ad impressions. This contrasted with Snapchat, which was one of the top mobile brands in the world, still operating as a start-up. Noto expressed concern that if the growth in mobile ad spending was only single digits year-on-year, the growth rate of ad revenue would decrease significantly.
Noto's email likely pointed out that Facebook's mobile monetization outperformed desktop because advertisers were increasingly shifting budgets to mobile, where users spent more time. The implication for Snapchat was that, as a mobile-first app, it had a strong opportunity to monetize effectively by focusing on mobile advertising and user engagement, rather than trying to replicate desktop web monetization models.
In 2014, mobile platforms, especially apps like Facebook, were increasingly generating more ad revenue per user on mobile than on desktop. This was due to higher engagement on mobile devices and better mobile ad targeting capabilities. Noto wrote that if the growth in mobile revenue was driven by higher click through rates, Facebook would view products with significant mobile traction, like Snapchat, as more valuable for acquisition.
The email also analysed Facebook's Q1 2014 earnings, with a focus on mobile revenue. Noto believed that the growth in Facebook's desktop revenue was likely to fall negative in 2014.
Interestingly, the email was forwarded by Spiegel to Sony Pictures CEO Michael Lynton, who also sits on the board at Snapchat. This suggests that the insights from Noto's analysis may have influenced Snapchat's strategic decisions.
In the same year, Snapchat famously turned down a $3 billion acquisition offer by Facebook. Since then, Snapchat has continued to grow, and is now looking to expand into mobile video. As for Noto, he joined Twitter as CFO, while Google appointed Morgan Stanley's Ruth Porat as its new CFO, and Snapchat tapped Credit Suisse's Imran Khan to be its chief strategy officer and Square turned to former Goldman Sachs MD Sarah Friar to head up its finances.
This insight into Noto's 2014 email provides a fascinating look into the strategic thinking around mobile app monetization at a pivotal time in the industry's development. It underscores the importance of understanding and leveraging mobile-specific ad formats and the growing mobile ad market for app success.
- In light of Facebook's success in mobile monetization and the growing ad market for mobile apps, Noto suggested that Snapchat, a mobile-first app, should focus on mobile advertising and user engagement to monetize effectively.
- At a time when tech giants like Google and Twitter were making significant changes in their financial leadership, Noto's analysis on mobile app monetization, particularly his insights on Snapchat's potential value for Facebook, may have influenced strategic decisions within the company.
