Snapchat and the $3 Billion Question

This is a guest post by Megan Totka, Chief Editor for

What does Snapchat have up its sleeve?
Image via Shutterstock

In the wide world of social media, Snapchat remains somewhat of an enigma. The seemingly simple picture-sharing app is making headlines and has raised a number of questions amongst businesses and marketers alike, including but not limited to:

  • How viable is Snapchat as a marketing tool for businesses?
  • What is the size and reach of Snapchat’s userbase?
  • How does Snapchat plan to make money in the long-run?

Let’s not forget the billion dollar question. Well, make that three billion. Yes, Snapchat’s 23 year-old CEO has turned down a three billion dollar offer from Facebook to purchase the app.

Let that sink in for a moment.

Offers come and go rather rapidly in the world of apps and social. We remember when Facebook purchased Instagram for about one billion dollars. Conversely, we also remember when Twitter acquired Vine for a relatively low sum (in a deal believed to be around one million dollars). Was Snapchat’s decision a bold but justified one? With droves of critics clamoring about Snapchat’s refusal to take the money and run, one can’t help but wonder if the company has a few tricks up its sleeve.

But are those tricks worth three billion dollars?

The answer to such a question perhaps lies somewhere within the three aforementioned questions; what can Snapchat do for businesses, what’s the deal with their users and how do they plan to generate some cash?

What Does Snapchat Mean for Businesses?

On the surface, not much.

The premise of Snapchat is relatively simple. Users “snap” a picture on their smartphone and send it to a select group of followers. The picture is revealed to the user for ten seconds before *poof* and it’s gone forever. Users have the option to save the picture before it’s gone, but doing so will inform the sender that the picture has been saved. That’s it.

The applications of such a service for the average small business seem few and far between. While SMBs have found success with microvideo platforms such as Vine and Instagram, Snapchat doesn’t seem to do much that social media or email marketing can’t do or can’t already do better in terms of deals, offers and the like. It’s hard to see marketing potential for a seemingly niche service, but perhaps the potential for marketability boils down to Snapchat’s userbase?

Who and How Many?

Snapchat has been rather hush-hush about just how many users take advantage of their service; however, we do know two things. Firstly, Snapchat’s userbase is relatively young, with an estimated thirteen percent of teens between 13 and 18 using the app. Secondly, these youngsters are pretty passionate about the app itself, with some users snapping up to fifty pictures per day or more. According to CEO Evan Spiegel, users are sending 400 million snaps per day on the service.  It’s been projected that Snapchat has somewhere in the ballpark of 10 million users.

Younger users are normally more rabid users, for better or for worse. As such users are also fickle and tend to jump from app to app and social network to social network (remember MySpace’s fall from grace?), it seems as if it would have made sense for Snapchat to strike while the iron’s hot. Conversely, look what a base of the same sort of users has done for sites such as Tumblr and Pinterest.

Where’s the Money?

While the critics don’t see the value in what Snapchat has to offer, the app does have some intriguing options when it comes to cashing out. Apparently Snapchat has already been experimenting with photo and video advertisements between every 20th or 30th “snap.” This allows advertisers some prime real estate in front of an impressionable, young demographic. Concepts such as virtual shops where users conduct microtransactions for emoticons and other novelties to send to their friends have also popped up in the discussion. Such ideas certainly seem to spur the potential to make marketing efforts pay off by using Snapchat for business.

But $3 billion? No matter who you are, that’s a lot of dough.

The Bottom Line

The verdict’s still out on Snapchat as a viable tool for small businesses and marketers. And as for the $3 billion dollar question? Perhaps we’ll just have to wait and see. Regardless, one can’t help but feel that Snapchat’s window of opportunity is closing due to the nature of today’s fickle users.

But let’s not forgot how many critics thought Mark Zuckerberg was a madman for turning down those multi-million dollar offers for Facebook.

And we all know how that turned out.

Megan TotkaAbout the Author

Megan Totka is the Chief Editor for She specializes on the topic of small business tips and resources. helps small businesses grow their business on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.