Twitter Chief Financial Officer's confidential correspondence to the Snapchat CEO sheds light on the inner workings of Facebook
In a series of events that started in April 2014, Anthony Noto, then Co-Head of Global Tech, Media, and Telecom Investment Banking at Goldman Sachs, sent an email to Snapchat CEO Evan Spiegel expressing his interest in the mobile app's potential for growth.
Noto, who later joined Twitter as CFO, was intrigued by Snapchat's three-year plan to become a revenue-generating company. He was particularly interested in the strategies for monetization and user engagement, with a focus on expanding the advertising business while maintaining user privacy and data security.
At the time, Snapchat was one of the top mobile brands in the world, still operating as a start-up. Noto's email came at a critical juncture, as Snapchat had famously turned down a $3 billion acquisition offer from Facebook in 2013.
In his analysis, Noto noted that Facebook's advertising revenue accelerated from 72% year-on-year to 82% year-on-year in Q1 2014. He was surprised to discover that mobile was monetizing better than desktop at Facebook, leading him to question whether the better monetization was due to higher prices per click or higher click through rates.
If ads on mobile were more engaging and relevant than desktop ads, Noto believed, the addressable ad market for mobile would be bigger, leading to higher valuations for mobile companies like Snapchat. If mobile revenue growth at Facebook was driven by higher click through rates, it would view mobile companies like Snapchat as more valuable for acquisition.
Interestingly, other leaked Sony emails suggest that Twitter may have been considering an offer for Snapchat. This revelation came to light last week when all the leaked emails and documents from the Sony hack were made accessible through a searchable database on WikiLeaks.
Since its 2011 launch, Snapchat has grown rapidly and is now looking to expand into mobile video. With executives like Noto, Spiegel, and Imran Khan joining from Wall Street to Silicon Valley, the future of Snapchat looks promising. Sarah Friar, another executive who left Goldman Sachs, joined Square as CFO around the same time.
As Noto joined Twitter as CFO a couple of months later, it remains to be seen how his insights into the mobile advertising market will impact Twitter's strategy. However, his email to Spiegel sparked a conversation that underscores the potential of mobile companies like Snapchat in the digital advertising landscape.
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