Snapchat's Ladder: From Messaging to Monetization

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Hatched by Glasp

Sep 26, 2023

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Snapchat's Ladder: From Messaging to Monetization

In a world where attention is the most valuable resource, messaging services hold immense value. Humans crave interaction and affection, and messaging apps provide the perfect platform for connecting with those who matter most to us. We willingly give massive amounts of attention to messaging, making it a significant player in the digital landscape. However, launching a successful messaging service in the United States comes with its challenges, primarily due to the long-standing availability of free text messaging.

Unlike the rest of the world, where text messaging often comes at a cost, the US has enjoyed free text messaging for a long time. This poses a hurdle for new messaging services, as getting people to change their habits and workflows is no easy feat. The difficulty increases exponentially when trying to convince a critical mass of people to switch simultaneously. This is precisely why WhatsApp managed to become the fastest-growing social network ever, despite having a small team of engineers. By offering free text messaging just as people were transitioning to smartphones, WhatsApp provided a significant improvement that outweighed the cost of changing communication habits.

Snapchat, on the other hand, took a different approach to capturing attention and disrupting the messaging industry. Instead of focusing solely on text-based messages, Snapchat incorporated disappearing messages and pictures, particularly appealing to teenagers who wanted to keep their conversations private. Disappearing messages allowed users to communicate authentically, much like how we talk in real life. Additionally, the primary means of communication on Snapchat became pictures, often in the form of selfies.

Taking a page from Netflix's playbook, Snapchat leveraged available content to offer a unique benefit to users. Netflix started by using freely available DVDs to eliminate due dates and offer a vast selection, setting themselves apart from incumbent Blockbuster. This strategy helped Netflix build a strong user base and brand recognition, which they later used to secure streaming rights. Snapchat followed a similar path by introducing user-generated "stories" as a way to keep users engaged daily. Stories could be public or private, and users had to check the app regularly to avoid missing out. It transformed the reactive nature of chats into a more passive "sit-back" experience.

Furthermore, Snapchat recognized the potential for advertising within their platform and introduced Discover. Discover not only provided another avenue for capturing attention but also served as a natural advertising vehicle. Professional content was synonymous with professional ads, and Discover allowed Snapchat to experiment with brand advertising, paving the way for their future monetization efforts.

Snapchat's journey up the ladder continued with the introduction of feeds and optionality. Feeds provided users with a curated stream of content, ensuring they stayed engaged for longer periods. Additionally, optionality became a key revenue driver through the sale of stickers. Stickers not only generated direct sales but also offered a unique marketing channel for advertisers. LINE, a messaging app, successfully capitalized on this concept, making a significant portion of their revenue through sponsored stickers.

What sets Snapchat apart is its ability to deliver compelling products while remaining committed to its advertising business. CEO Mark Zuckerberg's leadership has been exemplary, as he surrounds himself with experienced executives and continuously learns and grows in areas where he has no expertise. This has resulted in a company that not only focuses on innovation but also prioritizes the success of advertisers looking to reach consumers through their platform.

In conclusion, Snapchat's evolution from a simple messaging app to a monetized platform is a testament to its ability to adapt and capture attention. By understanding the value of messaging, embracing unique features like disappearing messages and user-generated stories, and exploring new avenues for monetization, Snapchat has solidified its position in the digital landscape. For aspiring entrepreneurs and businesses looking to make an impact, here are three actionable pieces of advice:

  • 1. Embrace uniqueness: Differentiate yourself from incumbents by offering a distinct value proposition that addresses an underserved market. This will attract users and set you apart from the competition.
  • 2. Leverage available resources: Make the most of the resources at your disposal, whether it's freely available content or existing user bases. Utilize these assets to build a strong foundation and establish your brand.
  • 3. Prioritize user experience: Understand the way people naturally communicate and tailor your product to align with their preferences. Creating a seamless and engaging user experience will keep users coming back and provide opportunities for monetization.

By following these guidelines and staying adaptable, entrepreneurs can climb their own ladder of success in the ever-evolving digital landscape.

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