
How Snapchat is Missing Out on $1.5M in Revenue Each Day - sftueni
http://blog.namomedia.com/post/76243407158/how-snapchat-is-missing-out-on-1-5m-in-revenue-each
======
beat
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.

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hullo
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.

~~~
beat
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.

~~~
gabemart
> Facebook's per-user revenue for US users was $4.19 as of last October

Revenue per user over what time period?

~~~
jrpt
That's over one quarter.

The data is from their 10-Q: [http://files.shareholder.com/downloads/AMDA-
NJ5DZ/2956973952...](http://files.shareholder.com/downloads/AMDA-
NJ5DZ/2956973952x0xS1326801-13-31/1326801/filing.pdf)

$832MM revenue from US & Canada, with 199 million users = $4.18

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minimaxir
"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.

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

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

~~~
gagaga
They only share the same high-level concept. The execution and actual use-case
is very different.

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adventured
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.

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sytelus
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.

~~~
harryh
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.

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

~~~
kosei
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.

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kosei
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.

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

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Newky
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.

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uptown
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.

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msprague
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?

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

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

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

Edit: Here is a screenshot:
[http://i.imgur.com/QWYVFFq.png](http://i.imgur.com/QWYVFFq.png)

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

~~~
al2o3cr
Even better idea: after those users pay, offer the _senders_ an option to pay
to delete them sooner.

Repeat, until the cops show up. ;)

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michaelochurch
_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
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.

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shocks
Why is everything bold?

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

But thanks for the downvotes anyway.

