Can Snap’s Diversified Business Model Work? The first encrypted feedback of its Snapchat+ subscription service suggests yes. Less than two months after its launch at the end of June, it has passed the one million subscriber mark, in 25 countries (North America, Europe, Middle East and India). Admittedly, the social network has so far only convinced a tiny fraction of its 347 million daily active users, but this is proof that the offer is of interest, especially since it was relatively sparse at launch and that it is set to expand.
New features to convince even more subscribers
Users must pay 4.49 euros per month (3.99 dollars in the United States) to afford the service, which has mainly cosmetic advantages. Concretely, the most anticipated feature at launch was the ability to see who has watched their “story” several times, a futile detail for an inactive user.
But Snap presents the paid option above all as a community of fans of its app, on which it will be able to test new features in preview. In July, subscribers received exclusive access to Snapchat for desktop, a web version of the social network, available on a computer – normal users can only access the app from their smartphone.
Yesterday, the company announced a new set of features, headlining their messages when they respond to stories from “Snap Stars”, content creators, whose public account is verified by social network. In addition, they can use several alternative icons for their app, display an exclusive background behind their avatar, or even display an emoji to friends who watch their Snaps. If the social network maintains its monthly pace for the release of new products, its offer should quickly expand.
Diversify the advertising model
The success of Snapchat+ is important for the social network, because it would make it more resilient to the turmoil of online advertising. Snap’s price collapsed by more than 40% at the end of July, after its second quarter results: the company posted its weakest annual growth (13%) since its IPO in 2017, and accused 422 million dollars of losses, double the previous year. If the price has since risen, it is still 25% below its level before the fall.
The financial results of the other online advertising giants, following those of Snap, have made it possible to better understand the place of the social network in its market, where it remains a minor player with around 1% of the shares. Although affected by the reduction in advertising budgets (under the effect of poor macroeconomic conditions), Google, for example, was hit much less violently than Snap.
“When advertiser budgets go down, Snap gets cut first, followed by others like Twitter”, explains to La Tribune Jacques-Aurélien Marcireau, co-director of equity management at Edmond de Rothschild Asset Management. “Conversely, Google Search and Amazon are cut as a last resort because they offer quality advertising, preferred by advertisers“, he adds. Snap has carved its place in the media landscape with innovative formats, headlined by its augmented reality filters. Advertisers recognize the potential of this technology to deliver their ads, but models The current ones do not have conversion rates as high as the more traditional advertisements displayed around the results of Google’s search tool or that of Amazon.
One of the least established players
In other words, Snap is both a promising player in online advertising, but also one of the least established. He therefore needs to find other monetization channels to cover his back in the event of a crisis. Snapchat+ is one such tool. But the social network is also trying to capitalize on its creators with a system of virtual tokens (purchasable in real money), for the moment without much success.