Ads are coming to Snapchat, and “soon,” Evan Spiegel, the start-up’s young co-founder and CEO, said Wednesday. Spiegel made the announcement before attendees of the Vanity Fair New Establishment Summit, in San Francisco.
Officially part of Snapchat’s Stories feature, the impending ads will initially be “opt-in” and nontargeted, Spiegel said.
Industrywide, the news took few by surprise, on Wednesday. “Everyone knew that Snapchat, like every other app that gains as many users as they have, needed a monetization strategy,” said Jan Rezab, CEO of social media analytics firm Socialbakers.
As for Snapchat’s specific approach, Rezab said: “Targeting would be very difficult for their ‘anonymous’ user base right now. Eventually they will have to add targeting -- whether it's on a regional, demographic, or other level -- to grow their advertising base.”
Snapchat debuted “Stories” late last year -- a feature that lets users 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 forthcoming ads are expected to tie into “Our Story,” which was introduced to many users during the FIFA’s 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 Disneyworld. 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. Yet the numbers continue to tell a different story.
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. Some industry watchers say Snapchat’s popularity is bad news for advertisers because it represents a turn toward personal privacy and digital anonymity.
Snapchat also recently rolled out a text- and video-messaging feature named Chat, while making it easier for users to save their exchanges with friends.