Snapchat Business Model – How does Snapchat make money?

How much time do you spend on your mobile every day?

“Almost 4 to 5 hours”

What’s the first thing you open on your mobile when you wake-up?

Snapchat

It’s not just you, everyone accesses the Snapchat application on their mobile in the morning. All they do is check their friend stories, capture pictures and discover pages without hassles.

What is Snapchat?

Snapchat – The fastest way to share moments!!!

Snapchat is the leading social media app founded by Evan Spiegel, Bobby Murphy, and Reggie Brown. They are former students at Stanford University. The application was launched on Sep 6th 2011. Snapchat is available for Android and iOS devices. The core concept of Snapchat is that pictures, messages or videos you send, automatically these are available for a receiver at short periods of time.

No matter whether you’re a teen or adult, you might know about “Snapchat App”. It is one of the best social media applications available in the market. Simply put, Snapchat is the best application for kids and teens. Since the app has everything that youngstar want. This is the perfect place to share moments and make them look amazing.

Unlike other social media channels such as Facebook, Instagram and Twitter, Snapchat records and broadcast your activities and everything you do. Simply put, Snapchat is a mixed bag!!! Users can capture beautiful and funny pictures, send stories, connect with friends, follow new pages, chat and more. On the other hand, Snapchat provides excellent stuff for all age-groups such as news, games, quiz, puzzles, entertainment, video-editing, capturing innovative pictures and more.

Benefits of Snapchat

There are various benefits of using a Snapchat application for individuals and business. Many small and large businesses are using Snapchat to advertise their products or services and increasing their revenue.

  • Best platform to interact with customers
  • Attract new followers
  • Fun and exciting way to engage with target audience
  • Show the target audience that you’re real
  • Launch your new products or service
  • Maximum reach
  • Engaging ads
  • Easy to get started
  • Low maintenance
  • No technical knowledge is required to handle Snapchat account
  • 3rd most used social media channel

Snapchat – 2020 Performance

Let’s discuss how Snapchat has performed in 2020. According to a recent analysis, Snapchat reported 238 million active users every day at the beginning of 2020. Compared to 2019, the number of users will increase by 20% in 2020. It is expected to reach 363 million by the end of 2023. The revenue generated by Snapchat in 2020 is $462 million. It is accounting for 44% growth compared to 2019. 

The daily active users at the beginning of 2020 have surged by 20%. The active users are mostly from Europe and North America. In the first quarter period of 2020, users have created more than 4 billion snaps everyday.

On the other hand, the time period spent by users on Snapchat has increased by 35%. Sounds interesting right!!! The time spent on chatting and watching videos has doubled when compared to the first quarter of 2019.

How does Snapchat make money?

It’s no surprise that Snapchat is an amazing camera application. It helps users to capture crazy pictures, communicate with dear ones visually via images or videos. These are called Snaps. These snaps will be automatically deleted after the time-out.

Apart from sharing pictures and videos, users can interact with their dearest friends at any time by making audio or video calls. Also, they can communicate using emojis or stickers.

Enough said, let’s discuss how Snapchat is making good profits year over year.

Snapchat revenue model

Let’s keep things simple. Snapchat is earning more and more money through advertising. Yes, you’ve heard it right. In-app advertising is generating primary revenue for Snapchat. The Snap advertising will let advertisers promote their product or service through stories. Apps will run on full-screen videos and better sound quality.

Snap ads allow the advertisers to integrate excellent features and extra experience with their ads. It includes watching long-form videos, installing applications and more.

Snapchat’s revenue is growing every year. Let’s consider, Snapchat earned $58.66 million in 2015. The application has reached $1103 million in 2019. Currently, Snapchat has earned $464.2 in 2020.

The primary revenue source of the Snapchat business model is “advertising”. Unlike other social platforms such as Twitter and Instagram, Snapchat keeps the user information confidential. The application does not sell its users information to third-party sources.

Snapchat has professional designing team. Their team will creating outstanding advertising products. They design user-friendly and engaging ads, this way Snapchat users don’t get interrupted. Infact, users enjoy watching these ads. This is the primary reason even popular social channel such as Facebook is copying it’s feature.

Let’s dive into the topic. Snapchat earn revenue from it’s excellent features, let’s discuss them

Sponsored geo-filters

Geofilters are particular filters that are designed for a specific location. For example, local businesses can advertise their product or service to their location rather than advertising globally. On the other hand, Snapchat is offering an outstanding feature i.e “On-Demand Geo-filter”. This special feature is used by top businesses and movies to advertise. This way they can improve brand awareness and gain trust among Snapchat users.

Sponsored lenses

If you’re a teen, then this could be an excellent feature for you. Augmented reality generated lenses are the current trend. The designing team at Snapchat updates it frequently. There are few popular companies such as Taco Bell, Gatorade and more that are using Sponsored Lenses and increasing the brand equity and improving their user engagement.

Sponsored stories

Checking your friend’s stories might be fun and exciting. Snapchat works in a smart way while placing sponsored stories. Users can watch sponsored stories in their section automatically whenever they are checking for friend’s stories. Many popular businesses are introducing this feature whenever they launch a product or service to increase conversion and traffic. Eventually, Snapchat has earned better profits with this feature. Even Facebook has copied this feature and implemented on Instagram.

Shazam integration

If you’re a music lover then you might know about the amazing application – Shazam. People don’t need to install the Shazam application. This is an in-build application available on Snapchat. Users can use the Shazam application without hassles. They can search and share the music as Snap within a few simple clicks. With Shazam integration, Snapchat has earned millions of new users. On the other hand, Shazam is generating good revenue for Snapchat.

Discover

Snapchat has rolled out an excellent update on the “Discover” feature. As the name indicates users can discover anything with this functionality. They can check the daily news feed just by scrolling. Snapchat is earning money by accepting the partnership with publishers. These publishers can promote their stories at Discover section. This way, users are spending maximum time on scrolling the new feed at Snapchat. Publishers pay a lot of money to Snapchat for advertising their content. This could be a win-win solution for Snapchat and Publishers.

Snap Store

Are you a fashion freak? Snap Store is the best place for you. While using Snapchat don’t forget to open Snap Store. Snapchat is selling high-quality and exclusive fashion products. The merchandise ranges from t-shirts to sweatshirts. Users are loving the fashion goods and placing the orders. This way Snapchat is making money by selling it’s exclusive stuff to its users.

Unbelievable Snapchat facts & stats

  • As per Q1 Snapchat has more than 238 million active users around the world.
  • More than half of the users are 15 to 25 years age-group.
  • Around 70% of users are women on Snapchat.
  • Over 210 million snaps have been created by users everyday on Snapchat.
  • Snapchat is the 2nd most-used social media app worldwide.
  • It is considered the 3rd popular application in the market.
  • There are more than 53.5 million downloads.
  • 1 million lenses are created by users on Snapchat as of Q1 2020.
  • 63% of users agree that they check Snapchat everyday.
  • Snapchat has rejected the acquisition of Facebook by $3 billion and Google by 4 billion.

Wrapping up

Whether you’re planning to share stories or buy trendy merchandise, Snapchat is the perfect place for you. Snapchat was founded in 2011. The application is gaining popularity around the world. There are more than 238 active users who access Snapchat on a daily basis. Among them 70% of users are women. Apart from personal usage, Snapchat is a great platform for businesses to improve their brand awareness and increase user engagement. Snapchat is earning good revenue through advertising. This way Snapchat is promoting other business products or services on its platform and generating good ROI. Additionally, Snapchat is making money through its features such as sponsored geo-filters, lens, stories, store and more. As Snapchat is increasing its popularity, Facebook and Google have planned to acquire the application. But unfortunately, Snapchat has rejected it. In the future, Snapchat will introduce eye-catching features and help individuals and businesses to earn profits.

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