Earlier this week, Snapchat announced it is seeking a new round of funding that would value the company at $19 billion. This is a huge increase from it’s 2014 round of funding that valued the company at $10 billion. To put this new potential value in perspective, if the deal goes through it would make Snapchat the third most valuable venture-backed company in the world.

With only 12% of snaps being shared with more than one person, Snapchat maintains it is not a social networking service, instead emphasizing it is a messaging app. 100 million monthly active users, 400 million snaps per day, and 29.4 percent of Apple iPhone users engaging with the  messaging app, demonstrates Snapchat’s massive growth. And this growth begs the question, how can retailers use Snapchat to engage and advertise with their customers? And is it worth it?

Organic reach is still an option on Snapchat, possibly giving it some traction with marketers above other networks like Facebook. However, the nature of its organic advertising is very different. It is a 1:1 messaging service so there is no room for growth in terms of utilizing a consumers network. It also requires active engagement because in order to watch the content, a customer has to hold a button down.

This presents both challenges and benefits for advertisers. It forces retailers who utilize Snapchat to work harder on their content because to make it successful they have to make their customers want to see their advertisements. However, for the consumers they do manage to engage it is reasonable to assume they are more valuable because they are demonstrating an interest by opting in instead of just scrolling past it on their newsfeed.

Snapchat has also started to offer paid advertising, but the jury is still out on its success. It offers little in the way of analytics and ROI and in some instances seems ridiculously overpriced. However, the release of the “Discover” feature in January may bring some traction. By introducing content from reputable sources like National Geographic, Yahoo News, Comedy Central and CNN, Snapchat seems to be moving away from its messaging app branding. This might give it more flexibility in working with retailers and companies and displaying advertising.

Snapchat is a new and strange player in the world of mobile apps and social media. It gained a lot of popularity very quickly and is looking to monetize on that. But it still has some work left to do if it really wants to become more than a fad. It needs to figure out what it wants to be; a messaging app, a news curation source, a social network? And in order to make retailers and brands stick around it needs to find a way to bring in more user data and analytics.


[White Paper]
[White Paper]