© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: October 1, 2015 9:30 pm
Snapchat is preparing to launch a new advertising format that will allow brands to slip in to teenagers’ selfies, as it hunts for ways to make money from its young audience.
The messaging app, which is one of the most valuable private technology start-ups, is setting out to sell “sponsored lenses” to marketers, which are due to debut on the platform from Halloween, according to people familiar with the matter.
Snapchat will design the stickers on behalf of brands, with Hollywood studios likely to be among the first advertisers.
The animated lenses will appear alongside the regular options, launched two weeks ago, such as putting hearts where your eyes are or making it look like you are vomiting a rainbow.
Sponsored lenses will charge up to $750,000 for one brand to reach the entire userbase for one “on peak day” such as Halloween, Thanksgiving or Black Friday, or $450,000 for an off peak day, the people familiar with the matter said.
The company has reached a $100m projected annualised revenue run rate, according to one person familiar with the matter, with some brands already making $10m commitments for next year.
Snapchat declined to comment on pricing or revenue projections but a spokeswoman said: “Sponsored lenses allow Snapchatters to express themselves and connect with a brand in a really creative and dynamic way.”
The start-up, which last raised funds at a $16bn valuation, has been searching for new ways to monetise its audience of 100m daily active users ever since it abandoned its first major ad format, the brand story, earlier this year.
The company wanted to move beyond the series of linked photos to find new formats — but it has yet to hit on a mass market advertising product.
It is experimenting with everything from charging $1 for the ability to replay three snaps, which usually disappear after viewing, to allowing publishers such as Cosmopolitan and CNN to place advertisements in its Discover news service.
It has already made a move into advertising creative when it teamed up with advertising group WPP and Daily Mail, the news publisher, to launch a content marketing agency called Truffle Pig in June. The new company aims to use Snapchat and the Daily Mail as “test beds for original concepts in story-driven marketing”.
“Sponsored lenses allow Snapchatters to express themselves and connect with a brand in a really creative and dynamic way
The start-up is pitching itself as the place for marketers to reach young consumers, who do not watch TV and who are often not even on Facebook. Some 60 per cent of US smartphone users between the ages of 13 and 34 use the platform, viewing 4bn videos each day.
It is hoping this userbase will be enough to tempt marketers to buy ads, despite its lack of detailed targeting capabilities boasted by rivals such as Google and Facebook.
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in