True to form, Spiegel and Murphy are preparing to structure an IPO that would give investors no control of the company, similar to how media moguls Sumner Redstone and Rupert Murdoch control CBS, Viacom and Fox, The Wall Street Journal reported on Monday. Snap's two co-founders are expected to retain 70% of the company's voting shares despite owning less than 50% of its common stock (to be sure, Facebook created a dual-stock structure when it went public in 2012, and Google did something similar when it reorganized in 2015 under the Alphabet umbrella).
But ad agencies may be content to work with Snap on its own terms, mindful that as consumers under 35 years old turn away from traditional media, reaching them is becoming more and more difficult. The cohort known as Millennials or Gen Z, is more apt to watch on-demand content like Netflix (NFLX) , Hulu or any number of video-centric web sites. They're not going to go to a website unless they come across it on their social feeds.
"If you really want to get in front of this younger generation, Snapchat is the way to go," Monique Lemus of The Media Kitchen, a New York media planning agency, said in a phone interview. "For advertisers, they seem to be trying to take some slower steps, to make sure that the users are OK with the experience. They want to make sure that they stay relevant to the user."
And for the moment, that means operating an advertising platform that isn't nearly as robust as that of Facebook and Google even though marketers are eager for a third major digital option.
Yet as Snap moves closer to an IPO, Spiegel and Murphy are likely to feel increasing pressure to appease marketers who are even expected to increase their allocations to Google and Facebook in the coming year. For the moment, though Snap has stood firm to doing things its own way.
"It may be pride, or a certain amount of arrogance," Dawson said. "They're kind of saying, 'we're Snapchat, we know best how to reach our users, trust us.' And partly, they haven't had to. They're not a public company, so they haven't had enormous pressure to drive performance -- yet."