How Snapchat Can Work with Games
and make over $200 million a year in the process.
Messaging apps like Line and KakaoTalk have had a lot of success with app installs . This is something that Snapchat can do very easily while fitting it within their UX.
Snapchat has to have one of the highest open rates in apps. How many Snapchats are unopened in your inbox right now? The super-high engagement can lead to incredibly effective monetization using their current tech — no banner ads, pop-up interstitials are needed that would sacrifice the design. A native format would work very well. Think of a video or still ad in place of a Snapchat — let’s just go ahead and call it SnapAd.
What Would SnapAds look like?
I can picture something like the above. A sponsored Snapchat posted in the feed, the user clicks through and sees an interstitial or video of the game/app and then goes to a page to download when they let go. The download option page gives them the ability to share it with a friend as well.
Developers can also be creative with Snapchat Stories. Say, a Zynga ad showing how two Draw Something users fell in love starting with the game. Or on the non-games side, how Hotels.com helped a woman set up the perfect anniversary getaway with her husband.
What are the economics?
First, we have to make some assumptions since the data isn’t out there.
Using their 200 million photos sent per day and 5 million DAU from an article in June, and their current 350 million photos sent as of September, let’s assume there are 10M daily active users.
Let’s also assume a 90% standard open rate on Snapchats. And we’ll assume a 30% open rate on sponsored posts. Let’s also assume that they’re all US users (for the best CPI rates).
If we show 10 million users per day a native Snapchat in their feed. If 30% open it, that’s 3 million a day. Let’s say 20% of those 3 million click through to download the app, we’re now at 600,000. If 33% of those download the app, that’s 200,000 downloads. At a $3 cost-per-install, that’s $600,000 in revenue for one day at the current DAU.
$600,000 per day or $219 million per year.*using current numbers
Why?
Brands are going to be a harder sell. Snapchat reaches a young audience and a lot of adults (outside of tech) think it’s used for nude pics. Majority of them won’t know how to reach the users in a way that fits the audience. There will still be brands who can do cool integrations and are willing to spend, but it might be limited to brands willing to take a risk and put work in like Oreo’s or Taco Bell.
Game installs can provide consistent revenue, especially with age and gender targeting. They can target highly engaged young users based on age and gender which will bring in higher CPIs. Brands will do “cool” campaigns from time to time, but Snapchat isn’t going to get premium dollars for it.
As more retail apps get into the Pay-Per-Install market in the next year or so, this will be an even bigger opportunity. PPI market is going to be big for mobile first apps moving forward. The Line and KakaoTalk valuations are the perfect example of this. And Snapchat can go to publishing route like Line and KakaoTalk, but it’s a riskier strategy. Snapchat can also pull off what AppGratis and others couldn’t. If they convert really well and make a sponsored App of the Day — they can pull off blitz install campaigns that can bring in big bucks.
