The mobile messaging app known for its vanishing photos is reportedly leaning toward monetization for the first time.
Snapchat is reportedly opening itself up to advertisers for the first time with a new feature called Snapchat Discovery. The tool, claimed to potentially debut in November, would show users videos, news articles, and advertisements, all of which would vanish just as quickly as the apps' photos and messages. The move marks a big change for Snapchat, but will marketers embrace this new fleeting form of advertising?
Discovery would be Snapchat's first attempt at monetization, but despite its lack of revenue, the app was recently valued at $10 billion. Snapchat's massive worth can be largely attributed to its young, mostly female audience, a demographic coveted by advertisers. Nearly three-quarters of Snapchat's roughly 100 million monthly users are younger than 25.
And it seems brands may jump at the chance to advertise on the ephemeral platform.
"We knew a lot of our demographic, the teens, were in the stores snapping pictures of their fro-yo to their friends anyway, so we figured, why not get on that platform?" says Lara Nicotra, associate manager of social media and digital marketing at 16 Handles, the self-serve frozen yogurt chain that pioneered using Snapchat as a marketing tool.
In January 2013, 16 Handles asked people to snap pictures of their frozen yogurt. The company then snapped back a promo code to be opened at the register, rewarding the customer with a surprise discount of 16, 50, or 100 percent off their purchase.
"Look at the psychology of it: the chance that you can get 100 percent off, that's going to get you super excited," says Andrew Solmssen, managing director of digital agency Possible's Los Angeles office. "[16 Handles is] giving [customers] an experience and providing them with real value and this moment of delight - you can't underplay that piece."
While 16 Handles' January promo was just a test, it showed Nicotra how Snapchat could help her company's marketing efforts.
The frozen yogurt chain currently snaps previews whenever it's getting ready to release a new flavor, much like clothing companies Rebecca Minkoff and American Eagle Outfitters do with their upcoming styles. Brands such as Taco Bell, General Electric, and the New Orleans Saints are using the app, as well.
More marketers are likely to utilize Snapchat in the near future, not only because of its new advertising options, but because of its growth. According to a May report from Global Web Index, the app's user base has increased 67 percent from last year.
As Snapchat gets bigger and more mainstream, some of the preconceived notions about the app are being dispelled.
"I think people were initially be turned off because they thought it was for sending inappropriate messages," Nicotra says. "It's taken some time, but brands are realizing that's definitely not the case and there's more you can do with it."
While Snapchat isn't speaking publicly about its plans for monetization, Solmssen thinks the app would do well with location-based advertising, rather than the kind of pre-roll ads you have to watch before a YouTube video loads.
"Imagine if they used something like iBeacon and said, 'Andrew's on the move, it's 2 in the morning, let's send him a snap from a pizza place.
"Ads done in a smart way will not affect the user experience. Brands will just need to make sure the core audience doesn't see the ads and say, 'These are the most annoying things ever.' That's when you get into trouble," he notes.
Solmssen adds that especially in light of Snapchat turning down Facebook's $3 billion offer back in November, he's interested to see what's in store for the app.
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Before joining the ClickZ team, Mike O'Brien was a reporter for newspapers in Brooklyn and Eugene, Oregon, where he earned a Master's degree in journalism from the University of Oregon. Having also worked in newspaper sales, Mike enjoys writing about marketing and advertising much more than selling it.
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