How Snapchat is Missing Out on $1.5M in Revenue Each Day

http://blog.namomedia.com/post/76243407158/how-snapchat-is-missing-out-on-1-5m-in-revenue-each

by sftueni • 12 years ago

54 49 12 years ago

blog.namomedia.com

minimaxir3• 12 years ago

"Turning on ads" is not a magic monetization panacea for an established startup because you will lose users in protest. And there are more than enough replacements for Snapchat for those users to go to.

gagaga2• 12 years ago

Which apps are Snapchat replacements? Which ones have an existing userbase?

Nicholas_C• 12 years ago

Instagram. They have direct picture messaging that's very Snapchat like.

minimaxir3• 12 years ago

WhatsApp, Kik, Line, etc.

johnrob• 12 years ago

Are we sure the fill rate would be 100%? There isn't an infinite supply of ads waiting to be displayed.

kosei2• 12 years ago

Exactly. Many ad companies fill less than 10% of ads outside of the US. Possible that's accounted for in their $1.50 CPM, but they also may be estimating quite optimistically, considering Snapchat would add a huge amount of volume to any advertising company, especially a small one.

shocks2• 12 years ago

Why is everything bold?

shocks2• 12 years ago

This is a serious question. I find it hard to read.

But thanks for the downvotes anyway.

michaelochurch• 12 years ago

For Snapchat, monetizing with 320x50 banners or full-screen interstitials would degrade their user experience and deliver a serious hit to their brand.

Not really. They already have Evan Spiegel (Valleywag him) as their CEO. People who care about quality are not going to use it. "A serious hit to [the] brand" is a non-threat. What brand?

JacobAldridge• 12 years ago

Quick - name the CEO and ethical position of your preferred gas company, toothpaste supplier, and shoe manufacturer?

For the long term, and I don't know anything about Spiegel or Snapchat so I'm just taking your comment at face value, you are right about the negative impact a poor CEO can have. For a short-term hit to the brand, I would suggest most users neither know nor care.

The impact of the CEO over time will come from within (loss of good staff, failure to respond to market shifts etc) not external branding - as long as he doesn't go shooting elephants.

cocoflunchy• 12 years ago

This is not a very good argument... I don't think a significant portion of their user base knows about the identity of the CEO, nor do I think it has an impact on the quality of the app.

There are real issues with the quality of the app though. Maybe I'd use Snapchat if it didn't force restart my phone every time I tried to load a message...

rebel• 12 years ago

And what percentage of Snapchat users do you think have any clue who that is? As an HN reader (so already a tiny minority) I still don't know who he is.

adventured• 12 years ago

This should be titled: How Snapchat is missing out on destroying its "cool" factor by poorly monetizing an app that people can and will easily switch away from if you annoy them.

jevinskie• 12 years ago

I, personally, won't sit through a 30 second TV ad to see a 10 second (at most!) video from a friend.

beat4• 12 years ago

Monetizing a social user base is a great strategy for making millions of dollars. But Snapchat is clearly aiming at billions, or they wouldn't have turned down the multi-billion dollar offers they've already received. Facebook has little to fear from social apps with millions in revenue... so why were they willing to pay so much for a zero-revenue company? And why are VCs ponying up tens of millions in funding for a zero-revenue product? The potential revenue from these dinky little solutions suggested here won't even break even for the VC.

No, they have something much bigger and better up their sleeves. Leaving a few million on the table now in the interest of potential billions later is a very good trade.

Personally, I think the world is ready for a footprint-free social app - not just photos, but threaded conversation and what not. Like Facebook, only without anything for employers to troll and exes to stalk. I think they could literally beat Facebook. That's worth a lot of waiting and risk.

hullo• 12 years ago

Well, they're not talking about leaving a million on the table, they're talking about leaving a million and a half on the table every single day ("if only they'd use our product!"). The figure they come up with is a half a billion dollars, which is a much larger number than you're giving credit to here.

nostromo• 12 years ago

As a comparison, that's half of Twitter's current annual revenue.

beat4• 12 years ago

That's assuming not-wildly-optimistic assumptions within a self-serving analysis. Dial that back to $100M rather than half a billion, and it's no longer a tremendously appealing option.

Facebook's per-user revenue for US users was $4.19 as of last October (with far smaller amounts for non-US users). And that's with years of experience, rich targeting based on multi-year social data mining, and the ability to embed several ad impressions per pageview. Is Snapchat likely to hit that high mark? Not in the short term, for sure.

colechristensen3• 12 years ago

The collective belief that the limited-life feature of snapchat is worth billions of dollars represents what I think is a massive dilution.

Snapchat does nothing email doesn't, and email is free. I don't own and don't want to own any device which can guarantee any message has a limited life, that's all artificial.

pjc50• 12 years ago

The guarantee isn't crucial, it doesn't have to be watertight; the fact that it sets up an expectation of privacy and non-sharing changes the social context. Enough to become the sexting app of choice. And that's hugely valuable.

rjd2• 12 years ago

"Snapchat does nothing email doesn't" is about as useful or poignant as saying "A tractor does nothing a donkey doesn't"

higherpurpose• 12 years ago

No, they have something much bigger and better up their sleeves.

Better security and real privacy (messages that are private from the company itself) would be nice.

bsder• 12 years ago

Facebook has little to fear from social apps with millions in revenue... so why were they willing to pay so much for a zero-revenue company?

Because Facebook's userbase has saturated and is now leaking off.

To apps like Snapchat.

kosei2• 12 years ago

From experience, I'm always wary of ad sales folks giving "conservative estimates". This assumes a standard CTR that may not apply based on the medium based on user base, actual interaction rates (assuming that Snapchat users are more tech-savvy and less likely to interact with ads), etc. Interesting, but I'd guess fairly misleading from an actual numbers standpoint, considering it's in Namo's best interests to inflate the numbers for PR purposes.

matznerd2• 12 years ago

I have ads in snapchat right now and it isn't very intrusive.

aray• 12 years ago

I don't have any ads in mine. Are there screenshots of what those look like right now?

matznerd2• 12 years ago

You shouldn't have any ads... ;)

Edit: Here is a screenshot: http://i.imgur.com/QWYVFFq.png

Newky• 12 years ago

What is wrong with the sort of thing that whatsapp do? a small fee (~€1) a year.

If they could make it payable via some easy method (SMS?) then people would willingly pay a small fee for the use of snapchat. Sure people would go "Bah Humbug! Snapchat want me to pay a €1" but they have a very strong userbase, one that is extremely active. In the long run, I think their user base would prefer a one off payment than being inundated with advertising.

uptown• 12 years ago

I've always thought the best way for Snapchat to monetize would be to offer you one more glance at a photo if you watch an ad first. They could even make it opt-in on the photo-sharer's side. Give them a small percentage of the revenue generated by that advertisement to encourage opting-in, and also spur continued use of the service.

sytelus• 12 years ago

Silly question: What the hell is SnapChat? I feel like Cave Man living under rocks. I looked up SnapChat's website and there is hardly any info or encouragement why I should use this thing. It totally smells like Instagram which also I never used and know no one who uses it to date. I guess I'm just not cool.

slig• 12 years ago

It's a mobile app that people, mostly teens, use to send pictures to friends. The user can choose how many seconds each picture will be viewable and after the timeout, it's gone.

harryh• 12 years ago

Instagram has 150 Million MAUs. The fact that you don't know anyone who uses it says a lot more about you than it does about them.

zimbatm• 12 years ago

Better idea: allow users to pay to "keep" the snaps for a bit more longer.

jmathai• 12 years ago

"This is horrible, this idea" - http://www.youtube.com/watch?v=xlA9bNk3b5Q

al2o3cr• 12 years ago

Even better idea: after those users pay, offer the senders an option to pay to delete them sooner.

Repeat, until the cops show up. ;)

msprague• 12 years ago

Even if this is true, this assumes that the snapchat user base will remain stable. I've yet to see a substantial argument of why snapchat isn't just another fad. Does anyone else have this concern or am I just being pessimistic?

How Snapchat is Missing Out on $1.5M in Revenue Each Day

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