Snapchat Business Model: How They Made Billions

Snapchat and the Snapchat Business Model is no new name to the social media world. The application was built by Evan Spiegel, Bobby Murphy, and Reggie Brown when they were attending Stanford University in 2011.

An app made in the dorms of Stanford kicked off and it is now one of the most famous social media applications.

On Snapchat, you can send images and videos to your friends. You can also put up images and videos online for 24 hours. This feature is called a ‘Story’. It stays up for 24 hours until it disappears.

Snapchat and Snap Inc. have grown in the past few years. Snapchat’s estimated net worth as of May 2016 is $22 billion. The stock prices of Snap Inc., the parent company of Snapchat, nearly doubled in April 2018 when it rose from $5.79 to $11.28.

The figures and statistics have had the people asking one question, “How does Snapchat make money?” To put it in perspective, Snapchat Business Model is different for every customer and user. Their tailor-made packages is a unique aspect of their revenue model.

What is Snapchat?

Before we get into finer details about Snapchat’s revenue model, let’s talk about the application first. Snapchat is a social media application that got famous for its disappearing images, videos and text.

The unique aspect of Snapchat is that the recipient of a snap or text can only see them once before they disappear.

This unique aspect made Snapchat popular among the millennials. People aged 13 years till 34 years old account for 60% of the user base of Snapchat.

Moreover, the app enjoys the royalty of being ranked 3rd as the most popular social media application.

Snapchat allows you to put up stories that can consist of images, videos, ant text. These stories are available to your friends and other people depending on the privacy settings.

After 24 hours, the stories are deleted from your account. However, you can choose to save these stories in your ‘Memories’ so that you can view them later as well.

Other than this, you have a ‘Discover’ section in Snapchat that helps you to stay updated with latest news and stories from celebrities and different users.

Features of Snapchat?

Snapchat does its business smartly. The extensive use of analytics helps them to bake in features that the users like. These analytics are part of Snapchat business model that helps in revenue generation.

Discover

snapchat business model
The Discover Section

The discover section includes stories from various publishers around the world who put up their content over there. This section includes publishers like BuzzFeed, VICE, MTV, National Geographic etc.

The user can subscribe to these stories to pin them on the top of the Discover section.

You can find all kinds of content in the Discover section. There is something for everyone.

Stories

This is the feature that sets Snapchat apart from other social media application. Curate a story by adding images and videos. Your story lasts for 24 hours and your friends can view it.

Furthermore, your friends can reply to your stories as well. If they take a screenshot of your story, you also get a notification.

Live stories

Live stories is a feature that allows the users in the same location or event to add snaps to a story. Basically, it is a story curated by many users. It is a fun way to bring the Snapchat community together.

Snapchat Lenses

snapchat business model
The Camera UI and Lenses

Many users love this cool feature. These lenses add a creative twist to the pictures and videos of the Snapchatters. Snapchat roles out new lenses according to the events at hand.

Shazam

Snapchat has joined hands with Shazam to help the user base to identify the songs on the go. Hold the camera interface so that Snapchat can listen to the song and save it to your database. You can then send the song to your friends.

Filters

snapchat business model

The application also has a host of filters that you can apply on your snaps. Some of these filters are geo-sensitive. You can use these filters when in a certain location such as cities, museums, events etc.

Snapchat Business Model: How is Revenue Generated?

Also, learn about how Paytm earns its revenue here.

Snapchat, like Google, uses advertisements as a means to make money. These advertisements are packaged with the features in the application.

Nobody likes watching ads. However, if they are sold as features to the users, they would not mind the ads. This is just what Snapchat does.

Snapchat Business Model Uses Sponsored Geofilters

We have mentioned geofilters previously. Geofilters are frames that can be added to snaps during certain occasions or in locations. Companies and event administrators collaborate with Snapchat to create geofilters that are then used by users.

When users apply the geofilter, the filter acts as an ad. Snapchat charges the company for these geofilters. Moreover, other people can make geofilters as well.

Also, it is very common to have geofilters for weddings or other similar occasions. They charge a fee to create a geofilter.

Snapchat Business Model and Sponsored Lenses

Snapchat is well-known for employing augmented reality in their lenses. The AR technology increases the possibilities when it comes to creating lenses.

They have partnered with the likes of Taco Bell, Gatorade etc. in the past to create lenses. Furthermore, these lenses help to drive up sales for the partner companies. They tailors lenses for each company and make money from these partnerships.

Snapchat Business Model and the Discover Section

The Discover section is flooded with fun stories and news. You can use this space to find stories that interest you. Content creators pay Snapchat to reserve a spot in the Discover section so that they can advertise their content.

This particular feature makes sure that a user spends more time on the application. The stories and the news change daily. Hence, there is always something new to browse.

The publishers pay good money to get a chance to reach out to the huge user base of Snapchat.

Conclusion

Snapchat is getting bigger than ever. Their user base and shares have been growing on the daily. They use advertisements to make money. These advertisements are baked in to the features of the application so that they do not overwhelm the user.  

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