The Snapchat parent paid a reported $30 million to $40 million for the four-year-old company, an augmented reality platform that helps users visualize products in 3-D space — how a Coca-Cola display would look in a grocery store, for example, or how a new piece of furniture would fit into a living room.
Cimagine already works with brands like Coke, Jerome’s furniture stores in Southern California, and Shop Direct, a U.K. online retailer.
The purchase, Snap’s first in Israel, gives the Venice, California company entrée into the vibrant Middle Eastern tech hub, where it could build a research and development facility around Cimagine’s 20 employees.
The move also arms Snapchat with more AR technology, which it uses to add filters to users’ photos and videos, and adds a commerce component, which could entice brands to advertise on the platform as it ramps up for an initial public offering in early 2017.
Cimagine is one of a few major acquisitions Snap made in 2016 — that we know about, anyway, as the company is notoriously secretive about these kinds of things.
Snap also bought Bitstrips for around $100 million, later adding Bitmoji to the app so users can design cartoon versions of themselves to use in chats or as stickers on photos.
The company paid $200 million for San Francisco-based Vurb, a search app that helps users find things to do, and beefed up its ad-tech capabilities with the acquisition of San Francisco-based Flite, a platform for digital ad creation and management.
Snap also expressed interest in acquiring Lily Robotics, a flying camera startup.
Executive poaching and expansion
Meanwhile, Snap boosted its executive ranks, recruiting Tom Conrad from Pandora as its new vice president of product, and Rachel Racsusen from the White House as director of communications.
(The company also trimmed staff when necessary, letting go 15 to 20 employees when it ditched its daily local Live Stories to focus on events.)
And Snap expanded its operations locally and globally, signing a five-year lease at the Santa Monica Airport that gives the company nearly 80,000 square feet at a cost of $3 million per year.
The company also quietly expanded into Dallas, setting up shop in a Deep Ellum co-working space, and opened a 20-person office in Shenzhen, China, despite the country’s ban on its messaging app.
Fundraising
Snap funded this growth with hundreds of millions of dollars in new financing.
In March, Fidelity Investments invested another $175 million, though the company’s valuation stayed flat at $16 billion, followed by another $200 million in May that boosted Snap’s value to $20 million. The company’s Series F ultimately rose to $1.8 billion.
Meanwhile, Snap applied for and received $5 million in California tax credits for adding 1,194 employees in Venice Beach.
Adding up ads
The company also brought its sales into the hundreds of millions of dollars.
Snap finally gave in in 2016 and agreed to start measuring the audience for its advertising, pacting with Nielsen’s Digital Ad Ratings service to deliver mobile audience reach, frequency, demographics and gross ratings points for ad campaigns in the platform’s signature vertical format.
The company also unveiled three new products that enable advertisers to target its users based on their email addresses or mobile device IDs, what kinds of video they watch, and how much they have in common with existing customers.
Brands ate up Snapchat’s sponsored lenses, which turned users into giant tacos for Taco Bell, characters from “X-Men” for Fox, and Ghostbusters for Sony’s remake.
In June, the company aimed to ramp up revenue by adding advertising to user-generated stories and introducing a number of tools to automate ad buying on the platform for outside agencies. Snap also proposed changing the terms of the deals for its Discover section, offering a license fee for the content and pocketing ad sales rather than splitting advertising revenues with publishers.
By September, digital market research firm eMarketer projected that Snap’s revenues would reach $367 million in 2016 and close in on a billion dollars next year.
Going public
News broke in September that Snap had started to move toward an initial public offering by holding discussions with investment bankers.
By October, the company was working on paperwork that would value Snap at $25 billion or more, which would mark the largest IPO on the U.S. stock exchange since Alibaba went public with a $168 billion valuation in 2014, and hired Morgan Stanley and Goldman Sachs Group to lead its IPO. Reports surfaced that Snapchat was looking to raise as much as $4 billion, with valuation forecasts rising as high as $40 billion.
Snap confidentially filed for its IPO on Nov. 15. The public offering is expected to happen as early as March 2017.
Specs-driven rebrand
Snapchat made its biggest move of the year a couple of months earlier, changing its name in September to Snap Inc. and introducing its first hardware in one fell swoop.
The firm rebranded itself as a “camera company” with Spectacles, hip sunglasses with built-in cameras that record video and automatically upload it to Snapchat. Steve Horowitz, a former Motorola executive who leads Snap’s hardware efforts, was reportedly behind the new shades.
Spectacles went on sale last month but so far have only been available in pop-up vending machines that stay in one location for 24 hours as well as a temporary holiday store in New York City.
Features, features, features
As the year progressed, it seemed that changes and upgrades to the Snapchat app were driven by eventual release of Spectacles.
The company kicked off 2016 by shuttering its lens store and in April ended paid replays, bringing an end to a short-lived experiment in in-app purchases.
Instead, Snapchat introduced on-demand geofilters that individuals and small businesses alike could design and buy for themselves starting at $5. The company sold its first year-long geofilter this month to a Southern California mall developer that operates The Grove and Americana at the Brand.
In March, Snapchat revolutionized its chat functionality with Chat 2.0, enabling users to seamlessly talk, video chat, text and snap all during one conversation.
In June, the company redesigned its Discover and Stories sections, mimicking Pinterest’s tile style on the Discover page, adding a rotating stream of publishers to Stories, and in both sections bringing professionally produced on the same page as user-contributed Live Stories, as well as adding a subscription option to Discover channels.
The new design was short-lived, however. By October, Snapchat introduced Playlist, so users can watch their friends’ Stories one after another, and demoted Discover channels on the Stories screen in favor of users’ friends.
The company also introduced Memories, which enables users to save their snaps and stories on the ephemeral messaging app, and Groups, which enables users to chat with up to 16 friends at once.
The platform upped its augmented-reality game last month with the introduction of World Lenses, which add filters on the world around users in addition to selfies.
Copycats
Midway through 2016, Snapchat reached 150 million daily active users, surpassing Twitter with 140 million, in part because older users started using the app, with the percentage of Snapchatters among smartphone users age 25 and up multiplying sevenfold over the past three years.
The platform’s rise did not go unnoticed by its competitors, with Martin Sorrell, CEO of British ad giant WPP, describing Facebook’s “concern about the penetration that Snapchat is getting” and commenting that the social media giant has been “trying to undermine” its upstart competitor.
Facebook-owned Instagram blatantly ripped off Snapchat’s Stories feature, then Facebook itself launched a new camera with Snapchat-esque art and special effects.
Content deals
Meanwhile, Snap made deal after deal after deal with media companies to create content for the app.
Viacom was the first traditional media company to partner with Snapchat to produce content and sell ads on the platform, adding Comedy Central International and MTV Discover channels and offering Snapchat expanded access to events like the MTV Video Music Awards while selling ad inventory on its own channels as well as Snapchat Stories.
NBCUniversal followed with plans to develop customized series based on its portfolio, starting with “The Voice” and E! News. Turner was next with a deal for more sports as well as original shows based on its portfolio of series and brands, followed by mitú with content aimed at multicultural youth. Finally, Disney-ABC signed on to produce original content for Snapchat, starting with an aftershow for “The Bachelor.”
Meanwhile, Snapchat became a popular platform for sports and other events, scoring a deal to show highlights from the Summer Games in Rio with a dedicated Discover channel curated by BuzzFeed and daily Live Stories. The company also pacted with the NFL to give the football league a Discover channel and all regular-season, playoff and Super Bowl games Live Stories.
And Snapchat partnered with AEG to bring Live Stories to music festivals including the New Orleans Jazz & Heritage Festival and the Stagecoach Country Music Festival in Indio, Calif.
Scandals
Snap’s 2016 did not go off without a hitch. Although the company experienced nothing on the scale of “the Snappening” of 2014, in which 200,000 snaps, including some nude pictures, leaked online, there was a security breach in February that exposed personal data for 700 current and former employees.
A 14-year-old sued the company for failing to protect children from adult content on the app.
And twice the platform came under fire for releasing selfie filters that some users found to be racist. The first was one designed in honor of late reggae icon Bob Marley that added dreadlocks, a Rastafarian hat and brown skin. The second gave selfies raised eyebrows, rosy cheeks, closed eyes and buck teeth that some users compared to “yellowface” and that Snapchat quickly removed — another learning experience for the fast-moving company.
