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Is there any digital marketing value in new breed of social apps?

Matt Kapko | April 25, 2014
The road to revenue for ephemeral and anonymous apps like Snapchat, Secret and Whisper is uncharted. How these social apps will ever achieve a level of revenue that would justify their sky-high valuations is foggy at best.

As the debate rages on over how much a retweet or like is really worth, an entirely new crop of social media apps are sprouting up with hardly any marketing value attached to them at all.

After focusing on growing their user base for many years, the stalwarts of social media — Facebook, Twitter, LinkedIn and others — have begun to hit their stride with growing revenue streams thanks to a burgeoning class of ad products that deliver a clear return on investment for advertisers.

The path to revenue for ephemeral and anonymous apps like Snapchat, Secret, Whisper and Tinder is less defined. If any of these new social apps succeed in making revenue, they will have to travel down roads less traveled. After all, stickers and other quick-revenue schemes will never justify the sky-high valuations many of these companies are attracting among investors.

"These new entrants and these native social environments have really rich, built-for-mobile experiences with the potential for great ad units," says SocialWire CEO Bob Buch. How these apps get to that point and whether brands will ultimately flock to these platforms en mass is still unclear though.

Snapchat, the obvious leader in social ephemerality, has made the most progress in opening up its platform as a new playground for advertisers. Major brands like McDonald's, Taco Bell, Juicy Couture and HBO have taken advantage of Snapchat's "stories" feature to broadcast their snaps to all users.

"Snapchat allows communication. You identify yourself on Snapchat. That makes it easier for marketers. That's where Snapchat wins." — Cameron Yuill, angel investor

Unlike traditional snaps, which can be shared with friends in real-time and appear for no longer than 10 seconds before they are removed from the recipient's device, stories can stay visible for 24 hours and be replayed numerous times before they disappear.

But for all the innovation and new use cases made possible by Snapchat, the company is sharing very little about its plans for making money. "In-app transactions followed by advertising, that's the plan we're sticking to," Evan Spiegel told Forbes earlier this week. "It'll make sense in a Snapchat way ... but it will not be stickers."

Snapchat and others like it aren't doing themselves any favors by encouraging brands to purchase ads that disappear without so much as a hint of targeted advertising involved. But they do bring others advantages to the table.

In Snapchat's case, it can effectively guarantee engagement because users must keep their finger on a photo or video to view it.

"Snapchat is a platform that ultimately allows communication," says Cameron Yuill, an angel investor and entrepreneur in the ad tech space. "You identify yourself on Snapchat. That makes it easier for marketers to market to & I think that's where Snapchat wins."


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