Snapchat Moves from Ad Revenue Sharing to Licensing Fees

What: Snapchat is changing it' ad sales revenue model with media agencies.
Why it matters: Snapchat wants to pay content partners a flat license fee up front and keep the ad money for itself, instead of sharing ad revenue.

syfspld0_400x400The messaging app Snapchat, now known as Snap, is planning to make some adjustments to the way it works with media companies by changing its revenue model.

Since its launch in 2015,  publishers were able to sell ads in their own channels and then split revenues with the app.Whereas, Snapchat sold ads against the same content using its own sales team. Now, splits have varied depending on the deal and who sell the ads, Re-code has reported.

Snapchat wants to pay content partners a flat license fee up front and keep the ad money for itself, instead of sharing ad revenue. This resembles TV networks model to buy programming.

Snapchat Discover is only open to around 20 publishers, including BuzzFeed, Cosmopolitan, The Wall Street Journal, Food Network, and the NFL. Around 100 million of Snapchat users visit the Discover section every month, with the top-performing channels averaging view time of between 4 to 6 minutes.

Sources told Business Insider that those top-performing channels average around 10 million monthly users a month — far fewer than the amount of visitors they get to their sites — so an upfront payment may be seen as preferential to a risky advertising revenue share that requires time investment for their sales teams.

Media outlets have been selling “packages” to marketers that include Snapchat inventory, as well as ads on their other platforms like television or their websites, according to Business Insider. But now that terms have changed, it is uncertain whether media outlets would continue offering  such deals or adjust to Snapchat's new sales model while they accept money from it.

The move of the company may seemed to be aimed at having full control over its ad inventory to be ready for a public offering that could value the firm at US$25 billion or more.

Other digital platforms like Facebook and Apple, have offered similar programs to publishers that provide them content.

 

 


Editorial Staff (@portada_online)

Portada is the leading source of news and analysis on the Latin Marketing and Media space. Credibility is our biggest asset: The Portada team is very passionate about producing high-quality independent content that helps drive forward the Latin Marketing and Media space.
El equipo editorial de Portada se apasiona por elaborar contenidos de alta calidad. La credibilidad es nuestro mayor activo. La misión de Portada es ayudar a profesionales de negocios y medios a comprender y alcanzar a consumidores latinoamericanos, del mercado hispano de EE UU y España.

MORE FROM PORTADA


SALES LEADS: AFM, Honda, Pfizer…

SALES LEADS: AFM, Honda, Pfizer…

A summary for Corporate Marketers, Media Sales Executives and Advertising Agencies to see what clients are moving into the Multicultural market and/or targeting Multicultural consumers right now.


Research and Databases up to 50% off: Holiday Sales at Portada!

Research and Databases up to 50% off: Holiday Sales at Portada!

From now and until December 23 you have the opportunity to buy an annual subscription to Portada's propietary research reports at a 40% discount. Simply go to the Research Plus Subscription page  type the Code "PORTADAHOLIDAY" (Price of annual subscription of at least 10 propietary research reports a year is US$ 599 instead of US$999!