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The evolution of Snapchat and the opportunity for brands

When Snapchat declined to sell its platform to Facebook for $3 billion last fall, we all questioned where they were heading. At the time, most concluded that the only explanation was that  brand monetization must be in the works that would make the app worth twice that. According to Tech Crunch, they are raising a new round of financing, with a valuation of $10 billion. Even Dick Costolo, the CEO of Twitter, does not find that valuation absurd.  He tweeted, “Crazy growth, clear monetization path, and one of the best social products thinkers out there” (in reference to Evan Spiegel, Snapchat founder). Currently, Snapchat users send 400 million photos and videos every day, which exceeds the daily uploads on Facebook and Instagram combined.  With 27 million users in the USA alone and approximately 50 million users globally, Snapchat is fast climbing the ranks of relevance.

Whenever Speigel discusses revenue, he states “in-app transactions followed by advertising, that’s the plan we’re sticking to.”  What we know is that brands have already started marketing themselves on Snapchat and that the company is now actively looking to monetize this. What makes it tricky however, is that data disappears and therefore the targeted capabilities that Facebook and Twitter rely on are not possible for Snapchat.  However, they can guarantee engagement.  If you think of the way Snapchat works, they can tell with “absolute certainty whether their ads were viewed”.  Users must keep their fingers on a photo or video to view it and that same logic applies to any ads thrown their way.

The introduction of stories, which lets users stitch together a narrative of photos or videos that last for 24 hours, along with geo-tag features have allowed brands to get creative.  Promotional deals to new product announcements, behind-the-scenes footage, brand stories, quizzes and trivia have dominated this space. Below are a few examples featured on their pitch deck to brands:

Snapchat-1

 Another neat example is from Audi. The luxury car manufacturer partnered with ABC Family’s popular show, “Pretty Little Liars”, as their official social media sponsor.  Audi used the platform to give their followers exclusive bonus content from the show, as well as snippets of the stars in real time.

As the product evolves and the eyeballs continue to migrate, brands are going to get creative. With the playfulness of the younger Snapchat audience, brands should really focus on leveraging the platform accordingly. We, at Resolution, look forward to tackling such opportunities in the region as the user base continues to grow.