Things go full circle. In the mid-’90s, the internet was synonymous with chatrooms. And now teenagers are flocking to an app that feels a lot like AOL Instant Messenger — only this time with video.

Houseparty, which launched in February 2016, is an app that markets itself as a “living room” for youngsters. It’s very simple: Once signed up, they can create live hang-out sessions with the contacts on their phone. Each video call can include up to eight different people at a time.

Where teens go, brands are sure to follow. But is Houseparty gearing up to be a Snapchat-sized success — or a Peach-flavored failure? Here’s everything marketers need to know about the platform so far.

Let’s start at the beginning.
Houseparty is the Plan B for Life On Air, the company behind the now-defunct live streaming app Meerkat. That app, which rose to fame at the South by Southwest festival in 2015, was quashed by Twitter when it blocked Meerkat from streaming on its platform. In its absence, rivals Periscope and Facebook Live drew away early adopters.

After shedding staff, the team switched gears and launched Houseparty in February 2016 with some intentional misdirection (using the name of a co-founder’s husband as the developer).

The aim was to be an app that cultivated habitual, not occasional, use — hence the switch from public to private chats (and strangers to friends). The move attracted interest from the VC community, with Houseparty raising $52 million in a funding round lead by WhatsApp and Instagram investor Sequoia Capital last December.

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Early deadline
May 12, 2017

Do people use it?
Despite a slow start in the U.K., the app spent the tail end of 2016 creeping up the iTunes charts. In January, according to data from analytics firm App Annie, it secured the No. 4 spot on the iOS App Store’s most-downloaded social network apps, above the likes of Viber and Skype. Meerkat, despite the column inches, only ever ranked 639th.

OK. So what about advertising?
While the Houseparty team has so far been silent on the ‘A’ word, the fine print of its privacy agreement asks users to consent to adverts when they sign up to the service, which “may include” messages from third parties. In short, the brands are coming.

But private — or “dark” — social networks are tough for branded content to crack. Particularly for an app like Houseparty, which has one function and a limited discovery mechanism.

Unlike other apps such as Musical.ly, Houseparty is not a broadcast medium centered around discovering new content. It’s for existing relationships, not influencers or celebrities — which makes product placement harder.

Pete Grenfell, managing director at VCCP Kin, said that while “plonking a brand message somewhere” isn’t going to fly on a closed group of friends, there could be other inroads for brands here. For example, getting an influencer involved in conversations on the app, or using it to gain insight from what consumers are thinking about. Other agency execs contacted for this article agreed it could allow a qualitative research environment.

Adidas is one brand that is disseminating content via “squads” of users on dark social platforms like Whatsapp. “With improved social messaging AI capabilities, scaling these activations is more feasible than ever,” said Nicholas Gill, strategy partner at marketing agency Team Eleven.

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Matt Rhodes, head of strategy at agency WCRS, said there was potential for brands to sponsor chats. “This could work particularly well for entertainment brands — a movie franchise or sports team sponsoring a live viewalong, perhaps,” he said.

Are there any other worries here?
Over 60 percent of its users are under 24, similar advertiser-fodder to Snapchat‘s demographics — though the latter is now attracting more older users too.

But the app is rated 4+ (most other social networks are for users over 13). According to Rob Kabrovski, iProspect’s director of biddable activation for social and video, this could be a red flag for brands who don’t want to break the U.K.’s stringent CAP codes around advertising to children.

“Sure, you will get picked up by Gen Z users, but that comes with so many issues in terms of not wanting to promote to under-18s,” he said.

What about its rivals?
Social platforms have a history of stealing features from each other. But while other social platforms like Instagram and Facebook have tacked live streaming onto their product offerings, it is Houseparty’s only feature.

“Facebook have already rolled out group video chat on their messenger app, which will ultimately make it more difficult for HouseParty to sell themselves as having a strong USP,” explained Cathal Berragan, creative director at Social Chain USA.

However, its success has come after the launch of the major platforms’ live offerings. When you open the app, you see yourself — or whoever else is online. There’s only one thing to do. Simplicity like this will be hard for rivals to copy (as Twitter did with Meerkat). There are no distractions; all users have the same aim.

But equally, simplicity is harder to maintain when you need ad units. Whether its audience will stay long enough to see them will dictate its future path.

“Just as WhatsApp focussed on one thing that Facebook didn’t do very well, and Snapchat focused on what WhatApp didn’t do very well, along has come Houseparty to try to disrupt Snapchat — the disruptors get disrupted!” said Steve Stokes, chief strategy officer at Duke.

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