Snapchat, the three-year-old startup that turned down a $3 billion acquisition offer from Facebook, will soon start showing ads.
24-year-old CEO Evan Spiegel said on Thursday's Vanity Fair New Establishment Summit in San Francisco that his ephemeral messaging app, which has garnered millions of teenagers as loyal users, will soon deliver ads to start generating revenue. Snapchat has so far raised a $10 billion valuation with investors such as Yahoo and Kleiner Perkins Caufield & Byers, but has yet to start making money from the popular app.
But while personal messaging has always been Snapchat's first product, the ads will not show up in messages, which is a bit of good news for users who don't want their private messages riddled with ads. The ads will show up in Stories, Snapchat's video platform where everyone, from day-to-day users to Snapchat stars, can share videos that go live for 24 hours.
"We're cutting through the new technology around ads to the core of it, which is telling a story," Spiegel tells Katie Couric of Yahoo. "People are going to see the first Snapchat ads soon. They're going to be around our Stories product."
Spiegel also says, unlike ads seen on Facebook and Google, Snapchat ads will not use mined user data to target them towards people they think might be interested in seeing them. The ads are also optional, and users can opt out of viewing them if they want to.
Snapchat has been openly boosting its efforts to generate revenue recently. At the Advertising Week conference held in New York last week, Snapchat chief operating officer Emily White took to the stage to explain how the app works. And earlier this year, the company took on board former Facebook executive Mike Randall to head Snapchat's advertising efforts.
"Brands are going to have to figure out how to get super creative," says content marketing firm NewsCred CEO Shafqat Islam. "Just think about these agencies - they're used to creating either 30-second spots that cost millions of dollars, or display ads. Now they're going to have to make snaps."
In a way, Stories has already allowed companies to deliver ads to the fickle-minded demographic comprising 16 to 25-year-olds. 27-year-old Shaun McBride, one of Snapchat's biggest stars and known for his celebrity name Shonduras, says he's been paid up to $30,000 to advertise brands such as Disney, Taco Bell and Major League Soccer to his teenage audience.
"With Snapchat, you have their undivided attention. They're holding down the screen and it's awesome," Shonduras tells Forbes. "When else does that demographic spend seven seconds just soaking something in? They don't. They're too fast. So I think Snapchat really nails that."
Snapchat continues to grow rapidly since its inception, with users currently sending up to 700 million disappearing messages, photos and videos every day.
