The untold story of Snapchat what make millionaires and a Ghost that Haunts Mark Zuckerberg part seven

Snapchat: The Ghost That Haunts Zuckerberg. Part seven

How Snapchat makes money.

It sounds absurd to say, but even though Facebook had offered to buy Snapchat for around 3 billion dollars, Snapchat still essentially had zero revenue and no proven business model. They’d been funding all of their expansion with the money they’d received from investors. Snapchat’s perceived value came from the fact it had over a hundred million active users, which surely could be monetized at a later point - Snapchat just hadn’t figured out exactly how yet. To be fair, monetization hadn’t been the priority, the focus had been growing as quickly as possible, and filling the platform with ads could have hurt that.

But by 2014, Snapchat was spending over 100 million dollars a year, and Evan was keen to prove that Snapchat had a sustainable business model. So they began testing ways to make money, like letting users pay 99 cents to replay a Snapchat message from a friend. They also tested out a feature called Snapcash, where friends could send money to each other in the app.

But the big money was always going to come from advertising - the only problem is Snapchat’s ad platform was extremely basic and expensive compared with Google or Facebook ads. Plus, Snapchat had nowhere near the same kind of in-depth data about its users, so it couldn’t offer advertisers the same level of targeted advertising or analytics. To make things worse, Evan personally rejected some ad campaigns that he didn’t like or that he thought users wouldn’t like. He wanted ads to feel more like content, which meant advertisers had to create new original ads exclusively for Snapchat. But, despite all those drawbacks, Snapchat did have one big advantage: it was one of the best ways for advertisers to reach a younger demographic, a demographic they couldn’t easily reach anymore with TV or Facebook. Kids and teenagers had their attention on Snapchat, which meant advertisers were willing to throw money at Snapchat ads to try and reach them. And as Snapchat expanded its advertising services further, offering special campaigns like branded filters and lenses, the ad revenue started rolling in.

Meanwhile, Facebook continued to try and imitate Snapchat to try and win back younger users for themselves. Since their Snapchat clone called Poke had failed, they tried a new app called Slingshot, which was similar but had a twist that you had to send a picture before you could open the picture you’d received. But, it felt forced and unnatural, and never caught on. But as well as making new apps, Facebook tried integrating Snapchat features into their existing apps, like adding face filters into their camera just like Snapchat, and adding the stories feature on Facebook, Messenger, WhatsApp, and Instagram. And with that last one, they struck gold.

Instagram Stories really caught on. By the middle of 2017, it was getting 250 million daily active users, far higher than the 166 million daily active users on Snapchat Stories.

Even though the feature was essentially a clone of Snapchat, Instagram simply had more users, and thus Instagram was used more. At long last, Facebook had succeeded at copying Snapchat.

Not long after, Kylie Jenner infamously tweeted ‘Does anyone else not open Snapchat anymore? Or is it just me’ - this led to Snapchat stock losing 1.3 billion dollars.

Some wondered if this was the beginning of the end for Snapchat. And yet, if you look at what Snapchat is actually working on right now, this could in fact just be the beginning.

Click here to read about the real future of Snapchat.