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a) To build an ad business capable of handling $100m of ads. You need massive investments in sales, infrastructure, tools, etc. to build a business like that

b) They have one of the fastest growing user bases in the social space, their users spends an astounding amount of time on the app (estimated at 30 minutes per day), and their user base is the most targeted demographic for demographics. Also they have literally barely turned on the advertising machine and their initial forays have already hit a revenue run rate of $300M+.

So essentially they have a shitload of eyeballs, the eyeballs are growing massively, their eyeballs spend a lot of time on their app, and advertisers love those eyeballs. Their business valuation is based on massive potential, not current revenues, but their advertising efforts already show huge promise. There is almost no startup with anything close to their engagement, growth, and monetization potential and the last company that looked like them was Facebook. Hence, the HYPE.




To your point b... so it's all about bubbles? A race for eyeballs before they disappear to the next "new, cool" thing?

Because advertising isn't working for the people that sell "things." If social networks are supposed to create spending/buying in retail (both online and meatspace) they are not doing a very good job. Google: Retail sales 2016.


Fair point re: connection to the actual economy. But remember - the point of advertising is mostly not to increase sales overall, it's to steal sales from your competition in a zero sum game.


As a teenager, it's almost constantly open on everyones phone - I wouldn't be surprised if I have it open/constantly checking it over 5 hours a day.


Agreed. As a relatively light user (relative to friends), I easily spend hours a day with the app open. It's easily the most popular app for people in the teenage demographic, and anyone who's spent any amount of time with teenagers will realize this.


I wonder if the user base that rushes in so fast to Snapchat might not rush as quickly to the next cool app, whenever it pops up.


Especially once it starts getting cluttered with annoying ads.

Or when Mom and Dad discover it and try to move in.


The way Snapchat is designed is basically anti-Mom-and-Dad -- you get to choose who each message will go to specifically (like texts), and everything disappears after it's been sent or opened. For a parent trying to monitor their kids on Snapchat, there's really not that much you can do.


> 30 minutes per day

I don't know about you guys, but my friends spend probably upwards of an hour a day at least.


Why are advertisers so interested in teenagers?

I spend more money in a month at 25 than I did in a year at 18 and with less thought put into it too. I would have assumed people like me would be the primary advertising target demographic.


some possible theories: -teenagers may have less disposable incomes, but they are far less rational and discerning in their purchases. they make purchases much more based on emotion and trends, rather than utility or value. yes, i also have more money at 25 than 18, but at 25 my purchase decision is informed by different reasons because i'm making my own money now so i need to be smarter about how i spend it. -teenagers are at the brink of adulthood. if you can successfully get someone in that age to buy in, there's a good chance they will remain loyal to your brand. e.g mcdonalds marketing happy meals to kids to encourage them to continue "lovin it" as adults. -teenagers are far more "hivemind", so if something catches on with a popular group, aka the thoughtleaders or trendsetters, the marketing effect cascades across the entire landscape very quickly.




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