Four Ways Snapchat Can Turn a Profit

Last week, news hit via TechCrunch that the people behind the photo-sharing app Snapchat have been aggressively pursuing estimates of $100 million in funding as it moves towards its first monetization scheme. Following in the footsteps of so many web companies before it, Snapchat offers its app for free now, and after grabbing hold of a huge and loyal user base, will find a way to spin those users into revenue.

How, exactly, isn’t quite clear right now. But one thing is clear: it’s probably going to have something to do with advertisements. Like it or loathe it, most endeavors on the web can really only earn money one of two ways: charging users directly for the right to use the app, or subjecting them to advertisements. And sure, some users will pay a few bucks for apps they really like, but the majority of users who get used to using a program for free are usually ready to find their photo-sharing fun elsewhere once they have to part with some cash.

For those who aren’t in on what Snapchat does, the name says it all: instead of sending simple texts or instant messages to friends, you send photos and videos (which you can draw or write on, or attach text to). Once the recipients open your photo, it’ll vanish into the ether, irretrievable unless it’s screen-grabbed by whoever received it. So far, it’s been pretty popular with high school- and college-aged users, with older users starting to utilize the app as well. According to the TechCrunch post, the app sends over 150 million images per day.

So I started wondering how Snapchat might earn money as a company without a) pissing off its users, and b) fundamentally changing what the app does. And while I won’t claim to be an expert at making money (one look at my bank account should confirm that I am decidedly not), I do have some ideas for how Snapchat might avoid going from free to fee in order to bring in the bucks. However, can I stay within those two aforementioned rules?

In a word: no.

1. Show users timed advertisements. This is the most obvious and logical way to bring revenue into what has so far been a free experience. Basically, after using Snapchat for, say, an hour, the app ought to show a quick advertisement to users that they’ll have to sit through before they can send their next message. This model is annoying, but it’s been successfully employed by sites all over the web, most specifically YouTube and Hulu. Of course, those are video-watching sites, and fall in line with people who are accustomed to watching commercials in general. As such, it might not fit too well with Snapchat as a messaging/photo-sharing app. It could turn users off the second they see their first ad.

On the other hand, an ad that disappears after 10 seconds or less does fit in with the app’s current aesthetic. The company could find a way to make ads short and sweet. And, better yet, if the ads could be targeted to users based on the photos they share—much like Google uses algorithms to target ads to Gmail users based on the messages they send—so much the better.

2. Engage users with advertisers for mutual benefit. We’ve already established that even the addition of advertisements could potentially turn users away once their free app-usage has been interrupted in even small ways. But what if companies went beyond passively subjecting users to ads, and found a way to get them actively engaged? Imagine seeing an ad that prompts viewers to send back photos of them enjoying a delicious Doritos Locos Taco, or their new Steve Madden shoes. Doing so might result in a coupon for a future purchase, or a free sample for something else—there are plenty of possibilities.

Getting a user actively engaged in a product they already enjoy or may be interested in trying is a great way to turn an aggrieved commercial watcher into a willing participant in a company’s outreach efforts.  Best of all for advertisers, happy customers who receive those freebies are likely to tell their friends via Snapchat or other social networks, causing the positive feedback loop to expand. Speaking of those other social networks…

3. and 4. Allow sharing on Twitter and Facebook, and give the option of making photos permanent. Right now, Snapchat is a user-to-user experience that keeps interactions between people private. That, combined with the fact that photos self-destruct unless the recipients deliberately take and save a screen-grab, makes Snapchat’s successes so far relatively under the radar. I’m sure that an element of its popularity has to do with its feeling of exclusivity, but I have my doubts that it’ll really reach critical mass—and profitability—until it takes advantage of the millions already sharing photos on Twitter and Facebook.

What sets Snapchat’s photo-sharing apart from those social media platforms is the ability to quickly and easily scribble on photos, making shared moments even more personalized. But since these images disappear within seconds of being accessed, there’s a chance that some photos you really want to save and share with lots of people will be lost forever. Wouldn’t it be great if Snapchat allowed senders to set some photos as permanent with a simple tap? And maybe you really like that photo you just snapped—why not make it easy to share on Twitter and Facebook right from the app itself?

The fewer barriers Snapchat puts up between users and their friends is only a net positive for gaining more users. And if advertisers find a way to get users to start snapping and sharing photos to combine with special offers, there’s lots of potential for advertisers and customers to both feel like they’re winning. All of this is a net positive for Snapchat.

Yes, taking the auto-destruct and private elements of the Snapchat app out of the equation does fundamentally change the core of the program. But—in my view, at least—keeping user-generated images out of sight can only lead to irrelevance.

As an example, take last year’s mobile game sensation Draw Something by OMGPOP. The small developer released the game, which was basically a user-to-user, mobile version of Pictionary, and its popularity exploded. The company was purchased by mobile gaming giant Zynga for $180 million, and a sequel was released a few months ago.

But without people actively choosing to screen-grab drawings they sent or received, it was very difficult to get a sense of how users were interacting with the game. Long after the game had hit the height of its popularity, the developer integrated a way to share images on social media sites, but it seems that it may have been too little, too late. Interest took a nosedive, and Zynga closed the studio earlier this month.

Snapchat’s still in the early stages of life, and may very well find success in ways I couldn’t imagine in this list. It’s possible that the real driving force of the app’s popularity is how closed and personal it seems. No matter what, I’m curious to see how—and if—the company figures out how to turn a profit.

What do you think of my ideas? Let me know in the comments. Don’t be like Snapchat and keep it to yourself.