How Snapchat Makes Money? {Snapchat Business Model}

Snapchat was created and launched in the year 2011 by the students of Stanford University, Evan Spiegel, Reggie Brown, and Bobby Murphy. It will be a decade for Snapchat in July 2021.

This struck most to the youth and the main reason for that was the main idea on which it was based which was images or videos which would vanish in a few seconds. This theme was unique and was a striking feature for the young fellows. Users could add friends to their accounts with whom they could share pictures that need to be viewed within 24 hours.

The youth uses Snapchat to maintain a virtual network with friends and family as well as attract newer followers. The companies also utilize this platform to get traffic towards their platform, create awareness about their brand and promote their products. This also has influencers who utilize this platform for promotion purposes. This provides an alternate way to share content and trust-building. Kids prefer to use this app for the cool quotient of the app!

Thus it can be clearly understood that this platform primarily serves the Millenial and Generation Z while providing a great place for various local and global brands for promotion.

For those with the old school point of view and being confused about ways to use this app, various tutorials by numerous YouTubers like Tech Insider, etc. are available on YouTube.

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Statistics of Snapchat

It has a wide reach with a huge number of users over 265 million. Among these, 180 million users are actively involved. The Indian users have a big share in the users of Snapchat with the number rising over 74.35 million.

This has numerous Snaps shared on this platform of about more than 4 billion pictures and clips created daily.

It has an average engagement time of about 30 minutes per day. The maximum number of active Snapchat users are from North America closely followed by Europe.

The Snapchat Business Model

The basic draft of the Snapchat business is well architectured and therefore, it gives great importance to the demands of IM users, sponsors, and other content creators.

Value to the Instant Messanger users

Since the concern for privacy and security has been rising recently, Snapchat became the pioneer in grabbing the importance of privacy for the application used by youth. The most attractive feature of the content shared on Snapchat is that it vanishes automatically until saved.

On contrary to the platforms like Facebook and Instagram where people strive for sharing perfect clicks, this platform gave the space to raw and original moments.

Snapchat on the disappearing images and chats, ” Deleting is our default. This means most messages sent over Snapchat will be automatically deleted once they’ve been viewed or have expired. Here are some quick rules of thumb for how long different kinds of content stay on Snapchat servers!

Value to the Businesses

The main aim of businesses nowadays is to grab the attention of millennials. Since Snapchat is a platform famous among today’s generation, it serves as a greater place for brands too to promote and sell themselves.

Value to Content Creators

Many content creators from India faced a setback with the ban of Tik-Tok and a void was thus created which was readily filled by Snapchat Spotlight. Snapchat has many features resembling with Tik-Tok as it allows users to share pictures and short videos sharing. The trending creators on Snapchat make money for posting each day.

Features That Make Snapchat Stand Apart

FILTERS

There is nothing but the design veneers which can be incorporated into the pictures to make them more appealing. There are ample picture=frames that can be applied to pictures or videos. This platform not only provides filters that can be applied to pictures but also has a facility of customization of Geofilters or Moment Filters for different brands.

LENSES

This is a new and unique feature used by none other application which makes it even more attractive for youth. The functioning of this feature is that Snapchat uses real-life and real-time activities for the creation of attractive and entertaining lenses that incorporate a fun quotient and catchy effects to the content.

STORIES

In its early days, Snapchat got people excited about this app. Stories were one of the most striking features of this platform, which was offered by none other application, whereas now almost all other social media platforms have incorporated this feature. Thus, this unique feature enabled users to share the picture or video with people for up to 24 hours.

Other unique and distinct features of Snapchat are:

  • SANP ORIGINALS
  • SNAP MAP
  • SNAPCHAT SOUND
  • SCAN
  • SPOTLIGHT

How Does Snapchat Make a Profit?

The annual income of Snapchat has swollen incredibly from the year 2015 to 2020. It was just 59 million USD in 2015 and rose to 404 million USD in 2016 which further doubled by the next year. It crossed 1k million USD in 2018 and crossed 200million USD by 2020 reaching 2507 million USD.

ADVERTISEMENTS

Sponsored advertisements are the most crucial source of revenue for Snapchat as approximately 99% of its income is through paid advertisements. The ads are sketched in such a way that they mask in the form of user-friendly search results in line with their interest due to which the users get involved in them without even noticing that they are a part of sponsored content. Sponsered advertisements are the major source of income for social messaging apps which contributed about 1.53 million USD and 2.62 billion USD in the years 2019 and 2021 respectively.

SPONSORED LENSES

The actuality-generated Snapchat lenses from raw and real activities serve as eye candy to the youth as they are funny, lively, and interesting to use. To ensure that lenses are errorless and customer-friendly, Snapchat updates them weekly, and businesses pay Snapchat to make lenses as per their interest and demand.

SPONSERED FILTERS

Numerous businesses partner with this platform to generate customized Geofilters, particularly for certain occasions or certain events.

SPONSERED STORIES

Numerous times we see brand ads along with a friend’s story. the reason for that is that Snapchat very cleverly plants those ads to get maximum views and attention.

DISCOVER

This is an attribute of Snapchat which generates income for Snapchat. The content generators who want to get it published partner with this platform to get their content on this for which they pay handsomely to the application.

SNAP STORE

This is a feature that has been recently added to this application. It is used for the sale of exclusive merchandise such as Bitmoji Clothes, sweatshirts, etc.

Snapchat’s expenditure to enhance user’s experience and sustain this business

RESEARCH AND DEVELOPMENT

The parent company of this application is Snap Inc. which is basically a company of cameras that is of the opinion that that picture quality and a revolution in photography will help in better communication. For the same reason, its expenditure on R&D was approximately $1101.56 million in the year 2020.

COST OF REVENUE

Snapchat’s major expenditure is on its promotion and infrastructure maintenance. It spent a huge amount of $489 million of its profit on this in the initial two quarters of the year 2020.

SPOTLIGHT

This platform gives money to the creators of the video with the most number of views per day from a pool of $1million. The money to be paid is decided by the number of views a video has fetched in comparison to the other videos.

 

Snapchat has made us learn the significance of clicking and saving moments and sharing them with our friends and family! But a striking feature about this platform is that it is popular only among millennials.

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