Snapchat has recently poached Facebook senior executives in a bid to determine the best way to make money. They have their work cut out for them. They have rejected a 4 bill offer from Facebook. They will invariantly want to go down the Twitter route, trialling different revenue models before discussing IPO. Their core strength is privacy, and they are inherently tied to that strength. Privacy and advertising dollars are usually anathema, making this an exciting puzzle to watch come together in 2014/15.
Here are some creative ways Snapchat could make money:
1. Snapchat Extortion - Pay them top coin or they'll make all those kinky SEXTS public.
OK ready for the real list????
1. Display Sponsored Snapchat Stories from Advertisers in the Feed. These could be very contextual given Snapchat knows your location, name, phone number etc.
2. Make Sponsored Snapchat Stories Interactive - and link back through to the advertisers app or point of purchase e.g iTunes.
3. Snapchat Premium - Make special features like "screenshot" notification, or "image effect filters" part of a paid monthly package.
4. Snapchat Galleries - Create rich Brand destinations, similar to youtube branded channels, where a brand's Snapchat stories would remain permanently. Allow for vanity urls like snapchat.com/cocacola. Other company info could also be presented.
5. Snapchat Competitions - Formalise an offering around competition entries. Brands could establish rules for a competition like "the funniest Snapchat sent this weekend WINS a trip to Bali"
6. Snapchat offers & Custom Tabs - Similar to Facebook Offers - allow advertisers to grant discounts and free trials based on interaction with a Snapchat Brand page or Story.
7. Snapchat Desktop & API - Similar to instagram, create a desktop version, where Snapchatters can at least see an archive of their previous stories on a vanity url e.g snapchat.com/nimbull. This would open up a whole new opportunity to monetize that website with Display Advertising.
8. Snapchat Gaming - allow a developer API for the creation of image based games on Snapchat e.g you have 10 seconds (the time it takes for the snap to expire), to reorder pieces of a puzzle and see the image.
9. Snapchat Local/Live Events - Send Snapchat alerts to users smartphones as they pass a location of interest e.g record store. This could also be used by government on important days like New Years Eve, or at sporting events by Charity groups to raise money.
10. Snapchat Sponsored Friends - The current "snapchat score" is said to simply be a count of how many Snapchats you have sent and received. Snapchat can make this a much more sophisticated algorithm, based on the way people interact with your Snaps and Stories. Snapchat automatically groups the people who are your "best friends", which is a strong indicator of how influential an individual is on Snapchat. Similar to Twitter promoted trends, a Brand could move into a users "best friends" section by paying a premium.