Many of you might have heard about the photo sharing app Snapchat, as it says ‘snap’ ‘chat’ it is nothing but chatting with pictures, the only interesting things is the pictures can not be saved and get erased few seconds after the recipient has seen it. Recently it got an offer from Facebook for a $3 Billion takeover surprisingly the founder of Snapchat turn-down the offer soon after that Google offered a $4 Billion that got turned downed too.

The interesting thing about the whole scenario is that the application does not have a working business model. There is one way though it can make huge profits, it has users and as snapchat claims a whooping 250 million pictures shared daily.

Below are my thoughts on how it can monetize.

Snapchat Platform:
If snapchat creates a platform which can connect users with the content; where any third party e.g. Google, Facebook, etc who has content around real world users can plug this into the platform and sell ads based on that, and while doing so shares a percent of the transaction/sale with snapchat it can make lot of money. The point is not only to make money from the giants who own content and the advertising infrastructure(software) but to open the possibility for any content owner to be able to do so. There might be different needs for different organizations to use the platform in many different ways, according to me it would be a true “Innovation in Adjacent Possible” because here they are not providing end to end solutions but opening a possibility which in turn open multiple possibilities in combination with other ideas.

Instagram Direct:
Yesterday Instagram released a feature for their mobile app called direct, its a Image messaging with comments between two or more users in private. Now if you read this you would go numb just thinking Snapchat denied $3B Acquisition, “That was stupid!”. Well according to me it was not, for a startup its easy to enter new possibilities, make new markets and disrupt the existing ones, remember what Iphone did back in 2007 (though Apple was not a startup I am providing an analogy here), I think snapchat has a chance to disrupt the ads marked in a big way, the world is going mobile and one never know we might wake up one day and there would be no Desktop/Laptop’s around you just special purpose embedded systems that might not be far from now, and being a mobile only company snapchat has the naiveness to try hundred different things, make mistakes and move fast. The point of all this is snapchat can bridge the gap that was created when Facebook denied the access to its content for third party, well that was obvious the content was attractive to the ad providers as the advertisers wanted to base their ads on the content around the user and Facebook wanted it all for itself to increase the revenue.

S-Platform: [Snapchat’s platform]
If at all they plan to launch a platform, first thing we know is that they don’t own content and does not plan to do so in near future, good. Now what they can do is index all the users and give them an unique ID which does not give any personal information about them and make those available to the thirdparty. What the third party has to do is align the content available with them with these IDs and show the most probable ad according to the mapping. One thing snapchat needs to own is a channel to display ads and monitor/curate them and a charging model say few cents per ad or something like that. The possibilities of such a platform are enormous soon they might be integrating that to the “Internet of things” the reach can go really far as one need not add a content about the indexed users one can treat an ID as a fridge of the future say In future we could have refrigerators with displays connected to the internet the platform can lure the advertisers by providing a reach directly to the users kitchen and once can sell a green vegetable or grocery. That is still an idea spinning in my mind put of paper, it has a long way to go but not too long. Its an opportunity!