Tech Transformers

Snapchat simplifies its app as it prepares for IPO

Patrick T. Fallon | Bloomberg | Getty Images

Ahead of its IPO scheduled later this year, Snapchat has upgraded its app on Android and iOS to make it easier for users to find their way around the social networking platform.

The new design makes it easier for users to navigate through a search bar, located at the top of the screen and also serves as a shortcut to the profile.

Snapchat told CNBC that the search bar lets you explore by title to find specific publisher stories and Our Stories in iOS. In addition to this, users can also access their profile from any screen by tapping Bitmoji, or the ghost icon if the Bitmoji is not linked. The design also makes it easier to find friends. Once you have searched for a friend in the newly designed search bar, you can tap the card to chat or tap the story or thumbnail to view their story full screen. Users can also press and hold on the card to see that Snapchatter's mini profile.

The company has close to 150 million daily active users with the majority in 18-to-24-year-old range. Its private nature lets users send videos to each other without sharing them publicly, which some believe will keep kids happy. But as mom and dad get interested in finding out more about the platform, there are concerns it could lose its cool factor.

"Becoming an advertising powerhouse may boil down to how well they manage relevance to their younger user base, with appeal to advertisers based on scale," Todd Alchin, chief creative strategist at creative media agency Noble People, told CNBC earlier.

The changes are timely as Snapchat's parent company Snap Inc is preparing for its initial public offering (IPO), which has been valued at a reported $25 billion and is expected in March. EMarketer projects Snapchat will generate about $370 million in revenue this year, and it's expected to near $1 billion in revenue next year.

But the company faces a few challenges as it gets closer to its IPO. To start with, Snapchat's style of advertising is best for promoting brand awareness, agencies say. That can be useful for large companies with big ad budgets, but medium to small companies want to see ads leading directly to sales, one agency source said. And Snapchat ads don't come cheap: One agency source said campaigns run between six and seven figures, and another said a sponsored lens can run between $350,000 to $700,000 a day.

Another challenge is that the company doesn't have much exclusive content and hasn't built a reputation as a place to watch video, like YouTube or Facebook. Longer viewing times lead to more time on platform, which makes advertisers more likely to want to buy ads.

However, Snapchat is trying to please users and investors by making these changes. The company is also allowing users to submit stories from anywhere anytime which means users won't be limited to building Our Stories from pre-selected locations or events where news is about to break, Snapchat said.

CNBC's Michelle Castillo contributed to this report