Already valued at $10B Snapchat will get its first revenue stream via advertisements soon

by Garrett Reim
October 12, 2014
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After months of speculation, Snapchat CEO Evan Spiegal has announced plans to run advertisements on the disappearing photo app. Snapchat has reportedly been meeting with advertising firms and brands in preparation for the launch. To date Snapchat has not monetized any elements of its app, so these advertisements will be the company’s first revenue stream.
 
“People are going to see the first Snapchat ads soon, they’re going to be around our Stories product,” said Spiegel, at the Vanity Fair New Establishment Summit. Though Spiegal did not give too many specifics, the advertisements were previously rumored to launch in November. 
 
“We’re cutting through a lot of the new technology stuff around ads to sort of the core of it, which I think has always been telling a story that leaves people with a new feeling,” said Spiegel. “They’re not fancy. You just look at it if you want to look at it, and you don’t if you don’t.”
 
It appears the advertisements won’t be targeted at all, but will rather be a form of blanketed native advertising. Snapchat’s ‘Our Story’ feature, an aggregate of many Snapchats focused around events like music festivals, could be a good template of how the advertising will work. Our Story displays to all users for a limited amount of time and is only played when the user selects it. 
 
By sending Snaps to their followers, several brands, including Taco Bell, Audi and GrubHub, informally have been using Snapchat as a marketing avenue for awhile now. Audi, for example, ran a campaign around Super Bowl 2014 that generated 100,000 views on Snapchat, and ended up being the source of 30 percent of conversation around Audi’s Super Bowl efforts. Taco Bell has also used the app to send out promotional discounts for their food. Those marketing uses, however, have been unpaid.
 
Snapchat has also recently been valued at $10 billion. Reportedly that valuation came after a $20 million investment by Kleiner Perkins. The company has not officially acknowledged the valuation; in response to the reported valuation the company said in a statement: "The valuation of our business and our capital requirements are the least exciting aspects of supporting the Snapchat community. We have no further comment at this time."
 
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