Trends in social media #1 – commercialising Snapchat

As social media evolves, the main challenge it’s faced with is how to generate revenue, commercialising the product without losing its ‘free’ price tag or users. The answer: to create enough advertising space the cash flow creeps up. Facebook is a prime example of a social network that has done this, and done it well. The company turned over $12 billion last year and are now worth over $200 billion – the reason being they have 1.44 billion people using their product.

Greg McFarlane wrote an article recently, which highlights how social media generates money. McFarlane looks at it this way:

“If you’re not paying for the product, the product is you”

If Facebook asked us to pay a subscription fee of, let’s say $5 a year (what everyone makes for them through advertisements) then we are no longer the product, but simply the user.

To exaggerate this point, McFarlane notes Twitter’s main goal, as stated in last years’ SEC filing, is “to attract advertisers to our platform and increase the amount that advertisers spend with us"[and]"to improve user monetization, including advertising revenue per timeline view."

The longevity of social media is down to whether or not networks can commercialise the product by attracting advertisers.

The most interesting, relevant use case of this happening right now is Snapchat. This app is commercialising its business in more creative ways than any others and I think it’s worth talking about.  Here is three ways Snapchat are doing this:

1. Discover – “this is not social media”

Earlier this year, the self-destructing messaging app evolved the storytelling format by teaming up with “world-class leaders” in media to build an extension app that puts the story first. Snapchat partnered with Sky News, Daily Mail, VICE, Cosmopolitan, and MTV to form Discover.  Visually leading, it was developed with creatives in mind and to serve the arts.

Bringing the news directly to your phone is nothing new, but it has completely reinvented Snapchat. By providing its media partners with an audience of 100 million daily users, the app has capitalized on its user-base. Twitter and Facebook have lead the way when it comes to turning the network into a news source, but Snapchat’s transformation is one of the most exciting social media developments this year.

2. Joint marketing ventures with WPP & Daily Mail

Expanding the way people use Snapchat is one way of monetizing a free platform, another would be to create joint marketing ventures with other media companies. Last week it was announced that advertising conglomerate WPP, Daily Mail and Snapchat would form a new company, called Truffle Pig, which will create social content for brands.

Truffle Pig “is the latest attempt to capitalize on a desire among marketers for campaigns that reach young consumers [millennials] and look less like traditional ads.” What is this company’s unique selling point? Daily Mail’s news coverage, WPP’s advertising knowledge, and yes, you guessed it, Snapchat’s social reach.

3. Branded content on the platform

Another announcement made this year from Snapchat HQ was its partnership with McDonald’s. Snapchat is again able to utilize its mass users base by introducing branded geofiltered stickers– McDonald’s being the first to go all-in. It’s about consumer engagement and that is why this kind of subtle advertising will win over millennials and be a success for Snapchat.

As a millennial, there is a reason why Snapchat is my network of choice, and it’s not because of self-destructing photos. It’s the geolocated stories – I can travel to Sao Paulo or Jakarta, Sydney or New York without getting on a plane, I can watch the top VICE stories on my commute to work, and I can tap into key events like Glastonbury, Coachella or Notting Hill Carnival effortlessly.

The future of social media relies heavily on capitalising a network’s users and Snapchat is doing this in the most innovative way – it knows its audience and more importantly how to make money out of them.

Remember, we’re the product, not the other way round.

*

Interested in adding social media analysis to your marketing strategy, or you'd like to see Pulsar's full capabilities, book yourself a demo by emailing: [email protected].