Can Snapchat Make Money?

Can Snapchat Make Money?

Snapchat-Buyout-From-Facebook-RejectedSnapchat has grown by leaps and bounds. Now, it is estimated that more than 77 percent of college students use Snapchat at least once a day. Of college students polled, 45 percent say they would open a snap from a brand they didn’t know and 73 percent said they would open a snap from a brand they were familiar with. This data suggests that advertising via snaps is a viable route for the future, similar to Twitter’s current model.

Brands could buy snaps and send short videos or animations to different demographics in the vast Snapchat network. The Snapchat terms and conditions outline that they have access to your personal data (name, phone number, location, email, age, type of device), all of which can be used for advertising targeting.

Even more promising data for the future of Snapchat ad revenue is that 69% of college students polled said they would add a brand on Snapchat if they already followed them on Facebook or Twitter. Another option is to offer incentives or discounts for adding a brand on Snapchat. 67 percent of the students polled said they would add brands if there were financial incentives.

There are over 400 million snaps sent daily and the company has $123 million in funding. However, some aspects of Snapchat have not taken off. Their new Story feature isn’t popular with the 18-24 year old demographic. With the Story feature they tried out a “click and buy” option to take users to iTunes to buy artists songs. Whether that works, or whether ads will take off, Snapchat is on the way to monetizing their user base.

However, I’m still not convinced the snapchat experience itself is not just a fad (same goes for Secret); I could much more easily imagine Snapchat usage trends reversing than with more useful services such as Facebook or WhatsApp. The jury is still out on whether the multibillion dollar valuations being assigned to Snapchat will be justified. I personally doubt they will ever make enough profit as a standalone business to do so—but with acquisitions these days, anything is possible.