How Does Snapchat Make Money

How Does Snapchat Make Money

Started as a final project for a design class at Stanford in 2011 who knows that Evan Spiegel's this project will bring revolution in social media platform. However, Evan's classmates believed it was a terrible idea to create a mobile app that permanently deletes your photos or texts once you opened it.

 But who knows that this tiny idea will turn into the billion-dollar company and become one of the most used social media apps. Today, Snapchat is one of the continually growing apps with its 150 million daily active users and adding more new features to engage with their users.

If you are a newbie to Snapchat, it lets users exchange messages that may include text, videos, and photos to which they called "snaps", and it automatically gets deleted once the user opened it. If it is a public post, then it will last until the next 24 hours. But you can’t snap more than 10 seconds of video, that is a limitation.

In Feb 2019, Snapchat has released its annual report in which it shows that they have earned $9.7 billion in just one year. But how Snapchat will make this money through only one app? Well, according to the annual report of Snap inc. Their 99% of revenues come from ads while the remaining 1% comes from Spectacles. Spectacles are one kind of sunglasses that comes with built-in cameras that sync with Snapchat.

How Does Snapchat Make Money

Well, Like Giant social media apps such as Facebook and Instagram, Snapchat also sells ad space on its app through which it earns most of the revenue. But Snapchat has divided this ad space into five things.

1.            Stories Ads

2.            Sponsored Lenses

3.            Discover Feed Ads

4.            Geo Filters

5.            Sports Partnerships

It seems interesting, right? Let's dig in more.

1. Stories Ads:

Most of the Snapchat earning comes from this advertising space. It merely collects ads from publishers and put in between your stories. Because while swiping stories, users are more actively looking at their screen, such ads contain a higher engagement rate among all the ad spaces. By keeping an average bid for a swipe-up ad action just $1-3, more publishers are going for this 10-second full-screen video ad for their business or niche.

How Does Snapchat Make Money

They have also partnered with different advertising companies such as 4C, SocialCode, TubeMogul, and Adaptly to improve their revenue by nearly $1 billion before next year.

2. Sponsored Lenses:

One of the most used features is their augmented reality filters that make your face look funny and chiller. While using an app, you have probably come across such sponsored Lenses. Do you remember that Taco Bell lenses? In the history of Snapchat, it was one of the most viewed/used ads, and the Taco Bell spent about $750,000 to get 224M impressions on their lenses.

So, If you are planning to create such Lenses for your business, they have fixed per day charges, or you can use their on-demand filters starting from $5 depending on the audio duration and audience size.

3. Discover Feed Ads:

If you are Snapchat user, you probably familiar with the Discover feed that can be accessible by swiping right. This feed comprises of different feeds from 20+ leading publisher partners such as MTV, BuzzFeed, CNN, DailyMail, and Esquire. Using the same mid snap ads placement, they have created this discover section for monetizing and earn more revenue. However, they have never mentioned their discover ads in their reports. But as per Digiday, it costs around $0.15 per view. Because this ad has a lower cost, it became the center of attraction for business as well as celebs to place their Ads and interact with their new fans.

4. Geo Filters:

How Does Snapchat Make Money

As the name suggests, Geofilters are limited to a particular geographical location. Simply, swipe left from the app after recording your Snap, you can quickly access all the branded geo-filters.

Before use Geo filters you have to know that How to create a snapchat Geo Filter. Snapchat users can also buy geo-filters straight from their website for particular events such as a wedding, party, or can create free geo-filters for the community. To advertise or promote your business using such a geo-filer, you can also create it via their website. Recently, X-Men snap filters during its premiere so users can quickly purchase tickets to the fiction movie, and it worked like a charm.

5. Partnerships & Spectacles:

In recent years, Snapchat is continuously partnering with various organizations to promote their business or individual events. One report by AdAge says Live Story is spending $400k to $500k to get more exposure and reach a broader audience in no time. Apart from that to date, Snap inc has partnered with many companies, including Adidas and Nike, as they can advertise their product to sports fans.

As we have mentioned earlier, the company also sells glasses called "spectacles" since 2016. Still its not enough to earn more through these funky glasses, and yet they have $40M in unsold spectacles.

So, this was Snapchat's spowerpack ad strategy to generate more revenue. Let us know what you are thinking by commenting below.

Author Bio:

Name: Pooja shah

Bio: Pooja Shah is a Creative Writer and an SEO expert at Auto Monkey. We provide an original analysis of the latest happenings in the social media industry. Connect with Latest Social Media Trends and News plus tips on Twitter, Facebook and other social tools on the web.