Snapchat is a very popular multimedia messaging app that allows its users to send and receive pictures and videos. One of the key differences between Snapchat and other multimedia messaging apps is, the picture and videos that you send on Snapchat will disappear after they’re viewed.
Snapchat is actually a camera app that allows users to connect with family and friends to exchange their happy and memorable memories. There are many ways Snapchat makes money. The five major sources of Snapchat’s earnings are Snap Ads, Geofilters, Sponsored Lens Filters, Discover, and Sports Partnerships.
What Is Snapchat?
If you want to know how Snapchat makes money then you have to understand what Snapchat is and what its business plan is. Snapchat is a privacy-focused social media and camera app that allows a person to share memories in visual form. In Snapchat, the medium of communication is pictures, videos, and texts that automatically disappear once the recipient sees them. Snapchat was established by Evan Spiegel, Reggie Brown, and Bobby Murphy in 2011. Snapchat has 150 million daily active users and it has an estimated valuation of $18 billion.
Who Are The Customers Of Snapchat?
The main customers of Snapchat are Generation Z. Generation Z consists of people who were born between 1996 and 2015. People from this generation are fond of Snapchat for its strong privacy. A recent study showed most of the Snapchat users fall between 13 to 34 years. Moreover, Snapchat is useful for business owners and content creators. Snapchat offers customized advertisements which are very convenient for business owners. Therefore, local business owners can use Snapchat as an excellent marketing platform.
How Does Snapchat Operate?
Snapchat is very user-friendly. Anyone age 13 or over can create an account on Snapchat. You will need to provide your date of birth, name, username, phone number, password, and valid mail address to open a Snapchat account. While giving the username you should remember that you can’t change the username once you complete your signup process. The ‘self-destructive’ instant messaging feature is very popular among Snapchat users. With Snapchat, you can click and share snaps instantly and maintain Streaks with your friends. Recently Snapchat introduced new features like Discover and Spotlight. Spotlight allows a Snapchat user to create content and get paid for it. Moreover, brands can show ads on Snapchat and earn lots of profits. They can open business IDs and show sponsored ads or can use customized Lenses and Geofilters.
How Does Snapchat Make Money?
This is the main item of Snapchat advertising and it is also the bread and butter of Snapchat’s income. In Snapchat you can show 10-second, full-screen video ads and they are also relevant to targeted audiences. These ads are interactive and users can swipe up to access more content like a long video, blog post, or app install. Snapchat also launched the Partners program to improve the conversions of the ad. They have partnered with firms like 4C, SocialCode, TubeMogul, and Adaptly. Snapchat generates nearly $1 billion ad revenue and the reason behind this explosive growth is the app’s immense popularity among Generation Z.
Geofilters are a type of filter that is contained in a particular geographical location. Once you take or record a snap you can access the Geofilters by left-swiping the screen. When a user uses Geofilters he/she doesn’t have to provide the details manually. When a Snapchat user is in a mall, national event, or famous landmark, Snapchat offers exclusive filters so the users no longer have to explain where they are or what they are doing. So, Geofilters help to quickly produce user-generated content and share it with social circles. If you want to use the Geofilters then you have to purchase it on-demand straight from Snapchat’s website.
Sponsored Lens Filters
Because of the high demand for filters in Snapchat, many big companies launched their sponsored lens filters. Sponsored Lens Filters are quite similar to Geofilters as these filters also available in some specific locations. However, lens filters are more interactive and dynamic compared to Geofilters. Lens filters play a sound clip when they are active and it helps to get more user immersion. For example, if you are eating in KFC then it will enable the Colonel Sanders lens filter and turn the user into the white-manned colonel himself. Moreover, a special animated fried chicken leg also takes place and it prompts the user to take a bite. You can easily create and buy your own custom lenses and filters directly from the app store.
You can open the discover section on Snapchat by swiping to the right two times. In the discover section you can find curated snaps from publishers such as CNN, BuzzFeed, People, Cosmopolitan, and other big brands. Moreover, you will see advertisements in-between snaps which indicates that the discover feed is monetized. Discover feed allows the publishers to post on Snapchat and entice viewers to consume their content. So Snapchat also earns revenue from the discover feed and the partnership of 20 big companies shows how much Snapchat earns from discovering.
Snapchat has partnered with various sports organizations like the NHL, NFL, and MLB. These organizations publish live stories during various sporting events to reach more people. So it is quite clear that Snapchat also generates a handsome amount of revenue from the Sports Partnerships. Snapchat has a huge young audience therefore major leagues are investing in deals that put up the weekly discover channels like the “MLB Wednesdays.” Moreover, the Sports Partnerships automatically promoted the live stories to all the active users.
I hope the above information has helped you understand how Snapchat makes money. It is quite clear that Snapchat makes money from the advertisers and partners up with big brands to show intrusive ads. If you have any queries about this topic then feel free to leave them in the comment section. Our experts will get to you.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.