WordWrite is currently active on most major social media platforms. We post new content on each of our channels daily. During a recent social media brainstorm, our team began discussing the rising popularity of the photo-sharing platform, Snapchat and its future as a business tool. As the conversation continued, we began to ask ourselves, “Is Snapchat ready for small businesses?” In an effort to answer this question, I decided to do a little research.
Upon its inception in 2011, Snapchat was created as a way to eliminate the permanence found on other social media platforms by limiting image view time. The app immediately found its niche with younger audiences looking to stray from more mainstream social channels.
A couple of things you should know about Snapchat:
- Snapchat was the fastest growing social media messaging app in 2014
- Snapchat’s main demographic is 13 to 23-year-olds
- 80 percent of Snapchat’s users are located in the US
- 350 million snaps are sent per day (compare this to55 million on Instagram and 400 million photos shared on Facebook)
Snapchat’s old business model
Snapchat is currently worth more than $15 billion and hopes to reach a self-estimate of $19 billion. As of 2014, the company had yet to institute a strong monetization strategy using in-app advertising. Snapchat’s CEO, Evan Spiegel, recently shared that he would not place ads in private correspondences or utilize targeting tools because he finds them too invasive for the user. Because of this, many companies believed that Snapchat had no way of generating revenue for their platform. All of that changed with the introduction of the Discover feature.
Snapchat’s current “revenue” sources
Discover, Snapchat’s relatively new content-sharing feature has brought big name companies like ESPN and Comedy Central flocking to the app. Discover enabled a very small group of businesses to pay to have their individual Snapchat stories (their daily collection of photos and videos) available for access by app users. In between each segment, advertisements played. Snapchat also plays advertisements in between its popular Live Stories: a collection of photos and videos taken around a specific live event. The price of advertising on Discover or Live Stories is currently 2 cents per view. This represents a greatly discounted rate since the initial price of 15 cents per view, announced at Discover’s launch.
The other form of advertising comes from the company Snapchat accounts themselves. Like with Twitter, Snapchat users can become friends with (follow) the accounts of businesses they like. Those businesses can then send snaps to the user with previews or deals on their products and services. In terms of revenue, Discover has proven to be wildly successful for Snapchat during its first month, however, traffic dropped by 30 to 50 percent since its launch. Even with this dramatic drop, many businesses are still advertising with Snapchat for a chance to reach their illusive audience of 13- to 23-year-olds.
The verdict
So back to the initial question: “Is Snapchat ready for small businesses?” The short answer: no—at least not right now. The current advertising model is still a little expensive for your typical mom-and-pop shop, but that’s exactly how Evan Spiegel wants it. Connecting with your audience and sharing meaningful content on Snapchat is very difficult unless it is through paid advertising. Snapchat possesses an impressive audience and a strong valuation, which is why it holds value for investors. Does all of this mean you should write it off? Maybe not. Ultimately, only time will tell if Snapchat will offer valid options for smaller businesses.
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Adam Tapparo is an intern at WordWrite Communications. Find him on Twitter @AdTapps.
Image source: Snapchat
