To answer this question, we need to sense what Snapchat is and what it’s all about and why you should assimilate it into your mobile development
Snapchat is a messaging social network that allows users to exchange “snaps” or text, videos, and photos messages. If the messages are private, they will be deleted automatically once they are opened. On the other hand, public posts have a 24-hour life span before they get deleted. Many may conclude that these limitations are uncalled for, and the worst thing about Snapchat is that the videos are only ten seconds long. It is either the craziest idea of messaging app or a genius out of this world communication concept from aliens! All users have concern and doubts about how does snapchat make money and a which business model that makes Snapchat this much popular. The mind-blowing question right?! Whatever you make of it you should know that it has 150 million daily active users and with that, Snapchat makes $18 billion money from the users with advertising and promotional parts. The brilliance philosophy behind this Snapchat network is that time is money in that engagement is increased by giving expiration dates to social content. People value exclusivity because it makes them feel special, and this is quite evident in sports news and tabloids.
You want to catch it the moment it happens. These are not the only features of Snapchat as its also bundled with other exciting features. Besides sending snaps, it also allows users to publish stories or curated snaps that are visible to followers. The social network also offers lenses that apply humorous overlays – from frowning faces to the infamous dog face filter.
Snapchat Earning Medium
Like any other social media network, Snapchat capitalizes on advertisements to monetize the platform, and they seem to be making a killing all thanks to its unique features. But how does Snapchat make money? Here are some of the Snapchat business modules.
1. Snap Ads
The major source of revenue for Snapchat is Snap Ads. These ads work by showing 10-second, full-screen video ads, relevant to other snaps. The ads are quite interactive, allowing users to swipe up to access more content, whether it a blog post, longer video, or app install. The company launched SnapChat Partners to improve the conversation. They did this with collaboration with firms like 4C, SocialCode, TubeMogul, and Adaptly. Brands ads are shown between your friends’ stories. It has attracted many brands, and they are joining this platform purposely to air their ads. In 2017, it reported a 60% watched videos and sound and action is a $1-3 “swipe-up” bid. The ads have a high engagement since users are more actively looking at their screens. The ads also capture 100% of your screen.
2. Sponsored Lens Filters
Sponsored Lens Filters are animated, interactive augmented reality filters, which are animated graphics that respond to users’ facial movements. Users can use these filters to lay over their Snaps and Stories. Companies and brands can buy and use these Sponsored Lenses to include messages to market their products so that Snapchat users see them. It can be a film studio advertising an upcoming blockbuster movie by purchasing Sponsored Lens that allows users to look like characters from the film. To make more interesting, users can take selfies and videos with this Sponsored Lens and send them to their friends so that they can use them in their stories.
A few years back, the Snapchat Discover section was not so cool, but its latest version has changed all that. Your friend’s stories are now merged with the discover section on the same screen, and you can’t miss it. The Discover section was created back in 2015, which was three years after it was created. This section was meant for publishers to post on Snapchat to lure in viewers to consume their content. It attracted major players in content creation from the likes of Buzzfeed, DailyMail, Esquire, and MTV. Their made generate a significant amount of revenue, although the exact figures haven’t been released yet. It is now a strategic marketing section that allows users to subscribe to different brands and receive notifications when these brands post new content. It also gives individuals with personal Snapchat accounts to get “discovered” by new fans by making their stories public. Snapchat and publishers share profits, but it’s not clear how they split it.
4. Branded Geofilters
What makes life interesting is living in the moment and enjoying the finer one-minute pleasures. This is what drives the Snapchat app mobile store. To them, what makes a moment special is capturing it and sharing it with your followers. Geofilters allows you to do exactly that since you no longer have to provide details manually. It won’t matter if it’s a national event, a mall or a famous landmark; Snapchat has exclusive filters that give your snap context. You don’t need to add where you were, why you were there and what you were doing. You are even encouraged to produce user-generated content and share it with your social circles. You can purchase geo-filters on-demand straight from their website. These filters are contained to a particular geographical location and are accessed by left-swiping when you are through taking pictures or recorded snaps. Branded filters have been enhanced to allow advertisers to promote different actions like visiting a website or making a purchase. Other actionable geo-filters are Snapchat views that allow e-commerce websites to generate extra income.
5. Sports Partnerships
Snapchat company has previously partnered with sports organizations such as the NHL, NFL, and MLB. These organizations supposedly leverage Live Stories during sporting events to reach more people in the social space. The main reason for this is to encourage and attract attendance from the younger fans and the millennial at large. These stories have also attracted sports gear giants like Adidas and Nike, who have now started advertising their products, to cater to millions of fans. A live story on Snapchat is estimated to worth $400k to $500k for complete exposure to the company’s user base. It is according to AdAge.com.
6. Selling Spectacles
Another way Snapchat makes money was through selling spectacles. These were overly-hyped glasses they used to sell to their users. These products came to the market in November 2016. They were delivered to clients through cute yellow dispenser machines that only carried a limited number of spectacles. The first week, they sold $130 Spectacles, and that was it! Things went ugly soon after the hype died, and Snapchat found itself with over $40M worth of unsold Spectacles.
Methods that Snapchat uses to make money
Another way that Snapchat can use to make money is by allowing businesses to connect and chat directly with customers, just like messaging brands do through Facebook. They can sell customer insights and entice them to spend more on ads. Doing so will allow Snapchat to provide streamlined services, just like Whatsapp. However, what will spoil for them is their technique of self-destructing messages and lack of quick response support.
Does Snapchat lose money?
Like any big company, loses are inevitable sometimes. Snapchat loses money, in fact, lots of it. In the second quarter of 2018, Snapchat made a loss of $353 million despite making $262M in revenue. It’s SNAP IPO wasn’t so popular due to its unclear future growth path.
How much money does Snapchat make?
In 2018, Snapchat was predicted to have$2 billion in revenue. This was five times what it made in 2017. It failed to reach this projection and settled at $1.16B. However, there was a 500% revenue increment from 2016 to 2017. The user base was also estimated to grow from 158M in 2017 to 221M in 2018. Its revenue projections in 2019 are $1.6B.
Valuation Details of Snapchat
Snapchat had a valuation of $17.4B as of January 5, 2018, at $14.50 per share which was is 46% less than its all-time high of $31.4B or $28 per share. Just like their vanishing images, their profits also vanished when the stock closed at $7.02 on 8 November 2018.
Snapchat IPO Earnings
The founders of Snapchat, Evan Spiegel and Bobby Murphy, made about $272M from Snap’s IPO after selling 16 million shares.
Snapchat Users Summary
Snapchat has a huge user base with a daily active user of 188M and 330M monthly active users. Users spend at least 30 minutes on the platform.
How You Can Start Earning Using Snapchat
There are several ways users can make money from Snapchat business model including:
- Advertise your product or brand to your friends
- Adding affiliates links to your Snap masterpieces
- You can use it to connect with followers on a personal level
- Small business can interact with customers by posting your daily routine
- You can sell shoutouts
- Seal deals by partnering with other brands
- Sell products through affiliate marketing
I trust you’ve learned a lot from this Snapchat article on how it makes money. The platform majorly makes money by partnering up with prominent brands and advertisers. It does this by selling intrusive ads. The company almost reached the 1 billion mark in 2017 in revenue even after its deplorable IPO. However, this is not enough to entice investors.