Snapchat faces competition in its quest for advertising dollars. Snapchat stars are signing lucrative advertising deals with brands themselves, according to a new report from The Information.
Snapchat’s most popular users, people like Shaun “Shonduras” McBride and the Vine-famous Jerome Jarre, are landing deals with huge consumer brands like Major League Soccer.
No Snapchat star has outright confirmed how much money they’re making off of these partnerships, though they could be making as much as six-figure incomes.
Here’s how it works: a Snapchat star makes a deal directly with a brand. They will post a sponsored Snap promoting the brand to their Snapchat Story, visible to anyone who follows them, in the form of a picture or a video. Or the Snapchat star will “take over” a brand’s Snapchat account, posting videos and pictures directly to the corporation’s Snapchat Story.
The Information reports that brands like working directly with the stars instead of working with Snapchat because it seems authentic to have a personality promoting a company, as opposed to running an advertisement.
“With teenagers especially we have found that having [a message] come through authentically and organically is better for us,” Farrah Bezner, a marketing director at Mondelez, told The Information.
But for now, Snapchat, which now draws more than 4 billion video views per day, seems to be “turning a blind eye to the conflict while observing them,” The Information’s Tom Dotan says. And eventually, Snapchat could come around to embracing the people becoming stars on its platform — just like YouTube has.
In fact, a Snapchat spokesperson told The Information: “At a high level, we are paying attention to what they are doing and trying to learn what’s working and what isn’t. They’re obviously important to us, and we’ll use this to inform our longer term thinking for how to best support them.”
Snapchat, most recently valued at $US16 billion, is on track to generate $US50 million in revenue this year. The ephemeral messaging app, which has 100 million daily users, could make $US200 million in revenue next year too.
Last year, Snapchat launched its first revenue product — Live Stories. Since then, it’s become one of Snapchat’s most popular features. The music festival Coachella, for example, attracted more than 40 million unique viewers. Snapchat has also run campaigns with huge advertisers like P&G and Coca-Cola.
Live Stories, a feature where users can share photos and videos of a live event, is one of Snapchat’s most lucrative business drivers.
Snapchat charges marketers two cents per view on a 10-second ad that shows up on one of the Live Stories contents, according to an earlier report in Re/code. SinceLive Stories can attract about 20 million people on average in a 24-hour span, meaning ad space on a 20 million view story can be worth about $US400,000.
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