Saturday, February 04, 2017

SNAP's IPO and Their Ad Business

Snapchat's parent Snap Inc filed for IPO recently, allowing some insight into their business model and their ad generation.  I have a Snapchat account, but rarely use it, so I was able to learn some interesting information:

1) Snapchat's users view 10 billion videos per day (this is more than the 8 billion videos per day Facebook claimed in 2015).

2) These videos are no longer than 10 seconds

3) These videos are strung into "stories" that can last several minutes.

What's different from facebook is that you can watch it like TV - no need to engage with it and no social feedback.

It's business model is surprisingly similar to that of television - they are more like traditional TV commercials, which they push 3 under 10 seconds videos into every 1.5-2 minutes of "storytime." Since Snapchat is considered the most important social network for teens and people in their early 20s (according to a survey by Piper Jaffray), this may well be a way for advertisers to connect to this demographic - which generally watches much less traditional television than prior generations.

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