Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 17 June 2017 at 10:00 GMT

Why Norway is Snap's dream country

  • Snap shares have fallen back to their IPO price for the first time
  • Usage of the social media app differs widely 
  • More than half of Norwegians are on Snap, while in Germany it's only a few %
  • If Snap is lucky, Norway might be the blueprint for other markets
Snapchat is extremely popular in Norway, where user rates are far ahead 
of those enjoyed by Twitter and Instagram. Photo: Shutterstock 

By Clemens Bomsdorf

While it remains the case that near-everybody is on Facebook, the general assumption regarding Snapchat is that users are mainly teens and young adults – i.e., under 30. 

While that might be the case in your home country, however, it is certainly not so everywhere... just look at Norway.

Norwegian social media statistics
In Norway, according to a recent Ipsos poll, there are 2.3 million Snapchat users over the age of 18 – meaning more than half of the country's adult population are snapping! 

This is what Ipsos correctly calls a "solid number-two position among social networks“. Number one, of course, is Facebook with a user share of 83% compared to Snapchat’s 56%. Seven out of ten Norwegian users, however, are on Snapchat daily; nine of ten users open the app on at least a weekly basis.

Amid the recent weakness seen in Snap Inc. shares (it just touched its IPO price again), let's have a closer look at how well the company's main product, Snapchat, can fare in its competitive market.

Snap shares hit their IPO price of $17 for the first time yesterday (click to enlarge):
Snap share in June so far
Source: Saxo Bank
Interestingly, there is a clear female dominance (56% versus 44%) among Snapchat users while Facebook, according to Ipsos data, is used almost equally by both sexes. 

Looking at this phenomenon from a different angle, one sees that 63% of all Norwegian women over 18 are on Snapchat while the figure is 49% only for men (it is 56% in total). Hence, women make up more than half of the Norwegian adult population's "Snappers". 

Women rule Snapchat

Believe it or not, female dominance on the platform increases with age. Among the 18-to-29 group, 93% of women use Snapchat, or 10 percentage points more than their male counterparts.

However, 66% of women in their forties and fifties use the app, a solid 24 percentage points more than men. One-third of all Norwegian women over 60 use Snapchat while it is only every fifth man. 

It is in that segment where the growth rate is highest. The number of Snapchat users aged 60-plus has increased threefold over the last two years, notes Ipsos.

international Snap data
Market data about other countries, while not directly comparable due to methodology differences, indicate that they are well behind Norway, in the main particularly when it comes to Snapchat use by the elderly.

Where are the Germans?

In its IPO filing, Snap reported 60 million users in the United States and Canada, which together have more than 350 million inhabitants. Based on those figures, the penetration rate for the overall population is below 20%. 

For Germany Snap speaks about 5 million daily users, which equals 6% of the population - the share a study by public service broadcasters ARD and ZDF for last year had as weekly users (which usually should be a higher number than the former). The value from the ARD/ZDF study peaks for the age group of 14 to 29 with 23% of that age group using the app. Of Germans aged 50 and older, only 1% are users. 

How come Norway is so far ahead? Well, the Nordic countries have a few characteristics that might help push up Snapchat user rates...

  • High internet usage rate 
  • High smartphone penetration rate
  • General tendency to be early adopters in IT
  • High-income
  • Less worried about internet security and privacy issues

The financial side of the story 

Just like Facebook and Twitter, Snap does not ask users for a subscription payment but is rather financed by advertisements, which of course requires both innovative formats and high usage numbers. 

Snapping among the fjords? Photo: Shutterstock

In terms of monetisation, Snap Discover is a relatively new feature started in Norway before being implented in other markets such as Germany. Using Discover, companies like CNN or VG put together Snaps in order to tell stories. 

In between, advertisements are placed and Snap and the content provider share revenues; other revenue sources include lenses and geo-tags. 

Snap does not really have the power to influence the aforementioned factors that are likely partly responsible for the high usage numbers in Norway. What it can do, is make its product better and better... and maybe tap less data to convince sceptical users from the more challenging but much larger German market. 

Clemens Bomsdorf is a consulting editor at Saxo Bank
12 April
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