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How does Snapchat make money? – A deeper dive into Snapchat advertising

It was Reggie Brown, who realized back in 2011, he wanted the pictures he was sending to his girlfriend to disapear immediatly. Soon after, Evan Spiegel and Bobby Brown heard about his idea and were jazzed about it. Not much later, Snapchat, an ephemeral photo sharing app, was born.

‘A place to share awkward selfies’

In their first blog post, Spiegel and Brown described the mobile app as ‘a place to share awkward selfies and funny photos with friends’. They explained Snapchat isn’t about capturing the traditional moment; it’s about communicating with the full range of human emotion, not just what appears to be pretty or perfect. Like when you think you are good at imitating someone, or if you want to show your friend the girl you have a crush.

After first making headlines as a sexting tool, 4 years later Snapchat has become one of the hottest social media apps with more than 200 million users. They succeeded in creating a network which is much closer to how we communicate face to face than any other social network. Moments are temporary and disapear and that’s exactly the feeling and behaviour Snapchat wants to emulate. But, with a valuation of $16 billion, one might wonder, how is Snapchat making money?

Snapchat Advertising

Spiegel is averse to most kinds of online adverting. He finds targeted ads creepy and thinks ads that accompany private one-to-one messages between users invasive, according to Bloomberg. Instead Speigel views advertising as a product, in contrary to most Internet founders who view advertising as a necessary evil.

Sponsored Stories

Sponsored Stories was the first ad format rolled out by Snapchat in June 2014. Sponsored Stories or Brand Stories allowed a brand to share their snaps with users that aren’t following them. Snapchat, however, discontinued Sponsored Stories in April 2015. They want to position themselves more like traditional media – but on a phone with a big audience of people less likely to check out traditional media such as TV or print magazines.

Placements in Snapchat’s Live Stories

Live Stories show life in different cities and broadcast live events. They are a kind of real-time, crowdsourced documentary made up by Snapchat’s users. On Average, Snapchat’s Live Stories draw an audience of 20 million people in the 24-hour window. Snapchat sells 4 ad spots, per Live Story. The ads are about 10 seconds long and resemble conventional TV spots.

Snapchat Discover

Snapchat’s publishing platform Discover launched in Janaury 2015. It lets media outlets, such as Yahoo, CNN, Cosmopolitan, or National Geographic post content, both videos and articles, every 24 hours in a very animated way. Publishers can also sell ad space on their Snapchat Discover Channel. Revenues from these ads are split between Snapchat and the publisher. With Discover, Snapchat is positioning itself in the ad world as a TV-style commercial space with millions of viewers a day.

Sponsored Lenses

The lenses feature allows users to take a picture or video of themselves and add different animated filters to the shot. Companies can create a unique filter with their brand logos or other branded animations, allowing companies to put their brand alongside people’s selfies. During peak holidays such as Halloween or Black Friday, Snapchat charges brands up to $750.000 to create a branded filter that reaches their entire user base.

People who thought Snapchat was just another trivial social media or messaging app must realize now they were completely wrong. Snapchat is well on its way to become a premier, mobile first media destination.

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