Snapchat, (or should I say Snap Inc.?) is currently in the midst of preparing for an initial public offering which is projected to be at a valuation of $25 billion or more. In context, that’s larger than both Twitter’s and Facebook’s initial IPOs from a few years back. Ironically, there is good money to be found on a platform that deletes all your digital content (in my case, really ugly selfies of myself with witty captions) after 24 hours. Despite this, 70% of 18-24 year olds already use Snapchat and this impressive stat is likely to continue to rise; the same can not be said for other competitors. So how has Snapchat gotten so big and why is it worth so much? Let’s break it down.
What is Snapchat?
If you’re not familiar, Snapchat is essentially a social media app that lets users send pictures and short videos with the option to send these “snaps” to either specific friends or all of them. These snaps can be further customized with stickers, doodles, geo-filters, and even selfie lenses — the flower crown and puppy filters are particularly popular. The catch is that these snaps suddenly disappear after 24 hours, unless someone takes a screenshot of course. This disappearing act is perhaps, I would argue, the largest appeal for users. There is no pressure to get the perfect picture to share on Instagram, or neatly condense one’s thoughts into a 140 character tweet. Snapchat is not focused on likes, it’s focused on the now, offering small, but instant glimpses into one’s life. With this in mind, we are often willing to share more with the comfort of knowing that it will all be gone by tomorrow.
Let’s say for example, your friend is attending a concert — could be Adele, Beyonce’s Formation Tour, Kanye’s Saint Pablo Tour, whatever floats their boat. You might see a tweet about how the show is going, there may be a picture on Instagram the next day featuring your friend’s concert outfit with the stage illuminated in the background, you might even see a photo album of the concert on Facebook two weeks later. But what platform will make me regret spending all of my money on sushi everyday of the week instead of saving up for that concert? Probably Snapchat. While I am sinking into my bed, I can practically watch in real time, the music, the choreography, even the emotional high notes; all from my friend’s Snapchat Story. It’s authentic, unfiltered, and instant.
Perhaps this is why Snapchat has amassed such a huge audience. The platform encourages users to create content freely without worrying about likes, which you can send to as little or many friends you like. As Snapchat has become increasingly popular, how do advertisers fit into this scenario?
The Geofilter Business
How do you monetize a business that revolves around a smartphone camera? One of the answers is the combination of GPS and customized filters. It’s that simple. With On-Demand Snapchat Geofilters, businesses are able to create and submit their own custom geofilters that Snapchat users will be able to access if they are within the designated area. This is perhaps most effective for running special events or campaigns with the goal of increasing general awareness and engagement. Films like the recent Terminator have used Snapchat geofilters on a wide-scale to build up anticipation leading up to the release of the movie. Even schools like Boston College have a variety of geofilters for students to play around with. Snapchat charges the prices based on how long these geofilters run and for how much area they cover. Due to how popular and ever-constant, these geofilters are, it’s pretty safe to say that Snapchat is making quite a bit of money.
Launched in January 2015, the Discover feature on Snapchat allows publishers to reach audiences with their own video editorial content. Partnering with media giants such as CNN, Buzzzfeed, ESPN, MTV, People, etc. and ranging from topics such as food and gaming, to fashion and politics and everything in between, there is instantly available content for any type of user. In this age of cord-cutting, more and more people are even turning to Snapchat’s coverage of events such as college football and music award shows as opposed to traditional television. Snapchat is able to generate a stable income as more and more publishers see the value of placing their content on the platform.
In between reading articles like “21 Increadible Animals With Real Superpowers” and watching your friend’s attempt to do a cartwheel while drunk at the tailgate yesterday, you may also run into some more traditional-looking advertisements. Luckily, you are able to quickly interact with these ads, whether it is a quick tap on the screen to skip, or a swipe up to interact with an advertiser’s mobile website. Effective ad integration has made Snapchat’s swipe up rate to be more than 5x higher than the average click through rate on other social media sites.
With more than 10 billion video views daily, there seems to be no slowing down for Snapchat. Tell me about your experience with Snapchat in the comments below!