The offer for Snapchat also comes as Facebook has acknowledged that teens are spending less time on the site. Facebook CFO David Ebersman spoke of the issue last month in the company's earnings call. The CFO's admission, along with that its News Feed ads had reached limits, sent shares tumbling from a 15% jump in after-hours trading to erase billions in valuation.
"If Facebook is saying they are having an issue with teens and they need to find an app for teen advertisers, then it's logical to find an app where teens are spending their time," says Forrester analyst Julie Ask.
Facebook purchased Instagram for $1 billion last year in what was seen as a defensive move to grab the photo app popular with teens. Instagram is a small team of developers with fewer than 30 employees; Snapchat is estimated to also have a small group of employees.
Messaging services, such as Snapchat, are growing at a rate beyond expectations, says Forrester's Ask. China's messaging service WeChat has ballooned to 400 million users in less than two years.
"The commercial value, however, is untapped and how these services will be monetized is an unknown," says Ask. --------------------------------------------------
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