Snapchat, with 100mn daily active users and 400mn snaps sent daily, struggled to make revenue until 2014, due to high costs involved. Snapchat’s sticky-growth-model allows for a strong user base in the 18-34 year old demographic, including many celebrities. This platform has great potential for advertisers to target the Millennials. But how can it find the right balance between satisfying customers paying nothing and making revenue through advertising?
Snapchat’s attempts for monetisation since 20114
Snapchat has tried to earn revenue through different forms including advertising. The most recent innovation are the Spectacle Glasses for consumers to buy online, as a way to increase consumer engagement. But advertisers have been unhappy with their ROI, as advertising on Snapchat is more expensive than on any other social media platform.
Being publicly listed, Snapchat has pressure to make additional revenue. In April 2017, Snapchat has finally announced some new features enabling businesses to better target consumers on this platform.
- Snap Engagement Audience: allows to re-target users who have previously engaged with the brand by using a sponsored lens for example.
- Exclusion option: users who have already responded to a campaign will avoid seeing similar campaigns and will be less annoyed.
- Ad bidding option: advertisers can now set a maximum they wish to spend, rather then spending per ad served. Snapchat will use this budget to target potential future customers.
Are you annoyed as a user with the increasing ads on Snapchat, while it used to be ad-free?
Example of brands such as Xmen and Taco-Bell paying for sponsored filters
I personally believe augmented-reality sponsored lenses are fun to play with and share amongst users, while being a good way to be creative and raise awareness for a particular brand.
According to eMarketer (2016), consumers are less bothered by ads on Snapchat than on Instagram.
U.S. Millennial users’ attitude toward ads on their favorite social platforms
Now, let’s discuss. Do you think that the more Snapchat advertises on its app, the less engaged the users will be and more drawn away from it? Do you use it less since Snapchat has begun advertising?
Marketing Insights 
Video ad length has been a concern for businesses on Snapchat since it introduced its first commercial formats, which included the ability to skip them. This resulted in Snapchat ads averaging less than 3 seconds a view. Unlike Instagram, in which a sponsored post or an ad has the ability to ruin users’ feed of followed posts, I do feel that users on Snapchat tend to not be bothered by ads due to the easy tap of the screen to skip them.
However, Snapchat still has to monitor the number of ads that appear between Snaps as ultimately consumers will not enjoy the app experience if ads keep popping up in-between every 2 Snaps or less. Therefore, I do feel that consumers will potentially be drawn away from Snapchat if more and more ads appear between Snaps.
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Thank you for your comment! I personally believe that it is legitimate for Snapchat to monetise its service through ads, in order to make revenue. After discussing ads on Snapchat with friends, I came to the conclusion that we still use Snapchat as much even though we see some ads in-between our friends’ Snapchat stories. The reason why is that they are engaging, short and subtle. For example, a Mcdonalds or movie filter for a new film coming out is a great and subtle strategy to engage with customers in a creative way. Facebook ads are too generic and intrusive, while Snapchat ads are live and can be personalised!
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Interesting post here! I think at the end of the day, each business is created to make money. Snapchat needs to find the most efficient ways to do so, while reducing expenses and costs. I personally hate ads, simply because they’re a disruption to my daily life. Whenever I see the stories for “Daily Mail” or “CNN” on Snap, i instantly exit out of the app because it’s not what i was after. Unfortunately for digital marketers a lot of people think the same way as I do, and the challenge is to engage this audience and achieve its attention. Not an easy thing to do, but the most skilled marketers should be able to achieve this.
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Hi Lauren, great post! I think the disruptive ads between Snapchat stories are really starting to frustrate users – even if they are easily dismissed. As for implications for marketers, I think the sponsored filters (like the ones pictured above) are a great way of incorporating advertising into the lives of users, benefiting them as well. Additionally, they are helping to boost consumer generated content which is very important these days!
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Thank you for your input Darcy! I agree with you, Snapchat tries to earn revenue with advertising (filters & branded stories) while trying to bother as less as possible users. I personally don’t feel frustrated when I use a sponsored filter, because I am using it and sharing it with my friends. The annoyance is thus hidden by this user-generated content as you mentioned!
I still think Snapchat can make some improvements, as I frequently am targeted with the same ad interrupting my stories of Visa and McDonalds. The now new “Exclusion Option” refraining advertisers to re-target the same people will help avoid this redundancy!
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