Snapchat Sees First Ads

Keeping its recent promise, Snapchat introduced ads to its messaging platform this weekend.

The first ad -- a sponsored story for the horror film “Ouija”-- appeared in the “Recent Updates” section of U.S. users' accounts. 

“It’s the first time we’ve done anything like this because it’s the first time we’ve been paid to put content in that space,” Snapchat said in a blog post. “It’s going to feel a little weird at first, but we’re taking the plunge.”

Weird, maybe, but Snapchat didn’t want the ads to take anyone by surprise. As such, Evan Spiegel, the start-up’s young co-founder and CEO, said the ads were coming “soon,” earlier this month.

As promised, the new ads -- which users can expect to see “from time to time,” according to Snapchat -- are opt-in and untargeted.

“You can choose if you want to watch it,” the startup said of its first ad product. “We want to see if we can deliver an experience that’s fun and informative, the way ads used to be, before they got creepy and targeted.”

Just like the content in Snapchat’s "Stories" section, the ads are supposed to disappear after users view them, or within 24 hours.

Also, at least for the moment, Snapchat is promising not to put ads in users’ “personal communication,” i.e., Snaps or Chats. “That would be totally rude,” it admitted.

The effort comes at a sensitive time for Snapchat. Threatening its standing as a secure platform, hackers just recently intercepted hundreds of thousands of private user messages, which they promising to release to the public. Whether the company can weather the resulting storm remains the subject of debate.

Snapchat debuted “Stories” late last year -- a feature that allows users to save and share photos for up to 24 hours. Adding a collaborative component to the service, the startup more recently unveiled its “Our Story” feature, so people at the same events could combine their own “snaps” into a single “story.”

The new ads tie into Our Story, which was introduced to many users during the FIFA World Cup final this year. The service’s entire community was given access to a stream of curated content created by attending the big game between Argentina and Germany.

Among other monetization efforts, Snapchat is also reportedly developing a new service, dubbed Snapchat Discovery, which will “show content and ads to Snapchat users,” according to The Wall Street Journal. Sources told WSJ to expect Discovery to debut by November.

The company also recently added location-based filters to its growing list of personalization features, which hinted at some big opportunities for brands. Indeed, a video demonstrating the “geofilters” featured users snapping selfies in front of a SoulCycle, a Groundwork coffee shop and Disney World. Suggesting a clear path to promotional initiatives, each location offered visitors branded images to include in their snaps.

Already, many on Madison Avenue have been happy to experiment with Snapchat. Following Taco Bell’s lead, McDonald's joined the service earlier this year, while Heineken more recently relied on Snapchat to connect with festival-goers at Coachella.

Among brands, other early adopters have included Juicy Couture, Seventeen, NPR and HBO's "Girls." To bolster its business side, Snapchat recently poached the global director of Facebook’s Preferred Marketing Developer program, Mike Randall. Randall officially serves as vice president of business and marketing partnerships at Snapchat.

Some notable investors have said they expect the anonymous social networking trend to be short-lived. Meanwhile, some industry watchers say Snapchat’s popularity is bad news for advertisers because it represents a turn toward personal privacy and digital anonymity.

Snapchat experienced the highest growth in time spent in July, with total minutes up 114% year-over-year -- from 2.6 billion to 5.5 billion minutes, per a recent note from JPMorgan, citing comScore data. (To put those numbers into perspective, Facebook saw its time spent rise from 137 billion to 178 billion minutes, during the same period.)

Naturally, Snapchat’s success has led to a lot of investor interest. Yahoo is reportedly close to investing around $20 million in Snapchat at a valuation of $10 billion. In August, Kleiner Perkins was reportedly ready to place another big bet on the company. To date, the highly visible venture capital firm has already invested upwards of $20 million in the messaging service.

All told, Snapchat has raised roughly $100 million from Lightspeed Venture Partners, Benchmark and Institutional Venture Partners, among others. 

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