Twitter, Snapchat: Redesigns and risks go hand in hand

Social-media runners up Twitter (TWTR) and Snapchat (SNAP) are retooling their platforms in hopes of reinvigorating user growth and keeping some semblance of pace with goliath Facebook (FB).

Twitter has doubled its character limit for tweets to 280 characters, and Snapchat is promising a design overhaul that makes its platform easier to use. Both moves aim to expand the services' appeal beyond core users and draw larger audiences.

Change is constant and a given for social platforms, but every tweak carries risks. Facebook has been a master of evolution, and its recent adjustments to Instagram are eating the lunch of Snapchat in particular.

The question for battle-scarred investors in Twitter and Snapchat: Will the platforms remain compelling niche offerings, or can they grow and become more mainstream? Will their latest moves be enough to turn around the business fortunes of the social platforms, whose shares each are trading at around half their initial offering price?

Services like Twitter and Snapchat gained favor because they were different from the incumbent powerhouse Facebook: Twitter enabled the broadcast of short messages without requiring two-way interaction, while Snapchat allowed millennials to share their lives with those closest to them without the pressure of gaining shares and likes, noted Koen Pauwels, a professor of marketing at the D'Amore-McKim School of Business at Northeastern University.

"Over time, however, these new services aim to grow their customer base by emulating key features of the legacy firms," Pauwels explained in an email to CBS MoneyWatch. "These changes may indeed attract new customers and increase usage of current customers. However, they also reduce the uniqueness and raison d'etre of Twitter and Snapchat."

He compared the phenomenon to the so-called "wheel of retailing," whereby rock-bottom discount retailers, once firmly established, try to boost prices and move upmarket to capture higher margins.

"The danger for Twitter and Snapchat is that emulating current Facebook practices takes away the reason why so many (young) people prefer them in the first place," Pauwels added. "As a result, they are likely to lose some of such disgruntled customers to even newer services, with their own unique features."

People may complain about redesigns, but that doesn't make them any less necessary, said Andrew Selepak, director of the graduate program in social media at the University of Florida. Snapchat especially badly needs a revamp -- in part because Instagram's redesign allows users to enjoy most of the features that made Snapchat so popular.

"Confusion is not a good business model," Selepak said of Snapchat's interface, which can be off-putting for new users. "For Snapchat to become profitable, it must attract older users and provide more analytics to marketers. The current design allows neither. Snapchat will not remain viable with slow growth and a complicated and often confusing interface."

The adoption of such big changes to a core digital product can amount to a bet-the-company moment. Consider the case of Facebook, where an overhaul of its News Feed four years ago -- which brought out plenty of naysayers -- ultimately turned the company into an unstoppable mobile force.

"The opposite was true for MySpace, whose redesign pushed many users over to Facebook and was a nail in the coffin for the business," said Jason Beckerman, CEO and co-founder of the New York-based social-marketing platform Unified. "For Snapchat and Twitter, their successes will depend on execution. Both companies have an opportunity to do something transformative, but the move is not without the risk of changing too much, too fast. This could cause their most loyal users to abandon them."

The risk in longer tweets is "people will just communicate the same things but in a sloppier way as opposed to transmitting information that's likely to get shared," said Aaron Shapiro, founder and CEO of digital advertising, app and website creator Huge. "A lot of Twitter's success has been the forced brevity."

It's less clear what Snapchat has planned for its overhaul, but Shapiro expects CEO Evan Spiegel to push the envelope in terms of design. "Given their track record, it's likely to be something that's buzzworthy and impactful," Shapiro said. "But we don't know until we see it. We just know a strong product team is behind it."

Even as the platforms change, loyal fans may stay true.

Younger social-media users have experienced constant evolution and tend to be tough to faze, said Courtney Spritzer, co-CEO of the social-media marketing and influencer agency Socialfly.

"If anything," she said, "a redesign may encourage new users to download the app to see what everyone is talking about for themselves."

Snapchat's core users will learn a new user interface "in a heartbeat," added Ian Cassidy, CEO of marketing agency Share Creative, which has offices in New York and London. The risk: "The spirit of Snapchat has been that it's a place where younger users can post freely and without judgment," he said, "and if the platform alienates their core audience, they run the risk of them moving to another platform."

On the other hand, Cassidy said, Twitter would be wise to focus more on current problems and "pain points" for its core users while focusing on facilitating real-time news and opinion sharing.

"Twitter's user base is notoriously fickle every time the company makes changes," he said, "creating an opportunity for Twitter to show its community that it's listening to them and implementing changes based on their feedback, like the ability to edit a tweet."