What is Snapchat’s Business Model?

Snapchat by pestoverde, on Flickr
Creative Commons Creative Commons Attribution 2.0 Generic License   photography by  pestoverde 

 

Nearly a year ago, Snapchat reportedly declined an acquisition offer from Facebook that was north of $3 billion. Fast forward to the waning hours of 2014 and you can see why: a recent SEC filing shows the photo-sharing service raising a fresh new round of funds, valuing the company north of $10 billion. So what might we see in 2015?

Lawsuits and server space aside, Snapchat will begin turning its head towards how it can begin to monetize on the millions of users snapping pics and video on a daily basis.

The company took its first step in this direction with a sponsored “our story”, a thread of posts that can be viewed an unlimited amount of times in a 24 hour period. Anyone can upload photos or video to the story if they’re within a geo-fenced location, allowing Snapchat to curate the best thread for that moment. Samsung was the first paying customer.

There’s a massive opportunity to explore these sponsored posts across multiple categories: entertainment, tourism, retail, education and more. Image “behind the scenes” tours at concerts or ball parks or immersive collection of posts from a college homecoming for all alumni. Look for a few artists or actresses with social media savvy to test the waters with varying kinds of sponsored story in 2015.

Artists, specifically musicians might yet have another social platform to share tunes or parts of their celebrity life with Snapchatters. According to some of the leaked emails from the Sony hack, we know that Snapchat has explored this area in some depth. Look for this to become more of a reality in 2015.

Another more secretive piece of information that was revealed on account of the Sony hack was the acquisition of a QR technology company, Scan.me. This brings a commerce play into the plans for Snapchat, potentially building in an impulsive approach to making purchases through the platform online or even in the store. Snapchat unveiled Snapcash in November of 2014. Look for more around payments and purchase habits within Snapchat in 2015.

With more than half a billion in funding, Snapchat will continue to experiment with new monetization efforts, albeit slowly. The most plausible next steps are an expansion of the stories product and a payment play, leveraging their latest Scan.me application and further relationship with Square or similar payment processor.

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