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