What Makes Snapchat a Success? (Part II) | Kevin Wang

Aside from the unique features Snapchat originally offers, its routine updates and monetization strategies have also contributed to its success.

Updates

After successfully establishing an user base, the next step for Snapchat is to maintain and grow. To do so, Snapchat frequently releases updates; some are minor bug fixes while others are major new features such as “stories.” These updates allow Snapchat to maintain and even increase their user base by addressing the issues that are brought up in customer feedback and releasing new features that attract new and returning users.

At large, Snapchat’s efforts on releasing updates stress the importance of the company’s gigantic user base. Let alone the fact that the number itself is quite a success, Snapchat uses the user base to target users for purposes such as monetization and even research.

Monetization

Last but not least, the success of businesses depends on their monetization strategies. Snapchat is no exception. It is important to note that Snapchat, like many of its competitions such as Instagram, is marketed as “free” on major digital distribution platforms (e.g. App Store and Google Play). This implies that the company does not directly profit from selling the application itself. Instead, Snapchat has chosen many other revenue sources. All of which have been deeply integrated with the app’s user experience. The following are some, if not all, of the features that Snapchat profits from:

Filters

ezgif.com-video-to-gif-2.gif

Snapchat filters are pre-generated overlays that can be applied to photos and videos. Users can use them to beautify their messages (e.g. by increasing saturation and contrast) and provide additional context such as the current temperature to the messages. When filters were first introduced, they were not intended to be a revenue source. However, this has changed when the “On-Demand” filters were introduced alongside the new “Geofilters.” Essentially, Geofilters can be created by third parties and are made available to Snapchat users when they enter a pre-selected geographic boundary (the so-called “geofence”). This means that Geofilters can display contents based on users’ locations. Snapchat charges local businesses when they create On-Demand Geofilters to advertises their businesses. In this way, Snapchat profits by selling advertisements to businesses while the businesses welcome more customers brought by Snapchat.

Lenses

ezgif.com-video-to-gif.gifLenses is a feature that generates a real-time special effect on selfies using augmented reality. Similar to filters, the feature was not initially developed for the purpose of profiting from advertisers. Soon after the introduction, “sponsored” lenses were made available to users. Many of them, such as the one from Taco Bell, are highly interactive. Users are fully engaged in “playing with” the lenses while being unconsciousness of the fact that they are being targeted by the advertisers. Snapchat profits from these “sponsors”. In fact, the company is being paid based on ad impressions (the times the ads are viewed), meaning that they could potentially gain millions of dollars just from ad sales.

From a business point of view, Snapchat is more of a platform than a “killer app.” It resembles a gigantic billboard where all the advertisements are displayed. It is not the fact that Snapchat gains millions every year that makes it successful; it is the fact that it has created a sustainable ecosystem in which all parties involved profit from.

Works Cited

Ads. Snapchat, Snap, http://www.snapchat.com/ads. Accessed 25 Oct. 2016.
Halleck, Thomas. “Snapchat Unveils Snapcash: With Square Payments, App Now Offers Free Digital Transfers.” International Business Times, IBT Media, http://www.ibtimes.com/snapchat-unveils-snapcash-square-payments-app-now-offers-free-digital-transfers-1725075. Accessed 25 Oct. 2016.
“Lenses.” Snapchat Support, Snap, support.snapchat.com/en-US/a/lenses1. Accessed 25 Oct. 2016.

5 thoughts on “What Makes Snapchat a Success? (Part II) | Kevin Wang

  1. riadas99

    I never oared attention to the revenue snapchat makes. I’ve always wondered why successful apps that are free have so much money? After reading this, I also thought of the news sources Snapchat has on their Stories page. They must get a lot of money from that too since it is another type of advertising for top news sources.

    Reply
    1. kevinwang11 Post author

      It is very true. These newspapers and magazines pay actually pay Snapchat to get their slots on the Stories page. They redirect users from the stories to their own websites and profit from ad impressions.

      Reply
  2. Max D.

    It was interesting that you said Snapchat maintained its users by doing frequent updates to ensure the best experience. Personally I found this worth exploring. Say that you were to develop a non-mobile app, a desktop software, I suppose, doing too many updates will definitely be an annoying experience, since as a user, I do not want to wait for it to update. But if all of a sudden, the same thing were to happen on a mobile platform, people are less concerned about the frequency of the updates, since most of them are done unnoticed (because of default auto-update setting). What do you think is an appropriate frequency for your product?

    Reply
    1. willmanidis

      To hop in for Kevin; you’re definitely right! Updating desktop apps is an annoying process and is something most users refuse to do which can lead to major problems on the development side. One of the major ways to counter this is by building it as a webapp and loading your app directly from your end every time the user opens it to ensure they are using the most recent software.

      Reply
  3. aidanpeterson

    The idea that everything is becoming monetized is one that’s very prominent in the music industry these days, there’s ads on every song you listen to! You should maybe try and capitalize on the music streaming demand, it has many connections to what you discussed in this blog post.

    Reply

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