Snapchat Is Making Some Pretty Serious Money From Live Stories

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Snapchat built a brand out of disappearing photos, but now it’s building a business from content that has a little more staying power.

It has been almost exactly a year since the messaging startup first introduced Live Stories, the photo and video montages that serve as look-ins on live events like the Kentucky Derby or Hillary Clinton’s presidential campaign rally. And in the past six months, Snapchat has beefed up the team that curates these stories while prepping for more advertising partners to coincide with the 2016 presidential campaigns.

A big reason for the push for ad revenue is to justify the company’s reported $16 billion valuation. Investors are betting big that Snapchat will be able to book $1 billion in yearly sales. So far, the popularity of Live Stories — among both advertisers and users — suggests it could be one of the best ways for the company to reach that goal.

Ben Schwerin, Snapchat’s director of partnerships, told Re/code that, on average, Snapchat’s Live Stories draw an audience of 20 million people in a 24-hour window. The three-day Live Story Snapchat did around Coachella back in April generated 40 million unique viewers, he said.

From a business standpoint, Live Stories are generating some good money for the company, too. Schwerin declined to discuss ad prices, but sources familiar with the business say Snapchat charges around two cents per view on a 10-second ad inserted alongside user submitted content — a rate very similar to what Snapchat charges for its Discover ads.

The rates change slightly depending on the specific event and expected audience, but two cents per view equates to $400,000 worth of ad space for a story generating 20 million views.

Snapchat used to highlight just one or two live events per week in January. Now, the company features multiple events per day. The company has grown its team of Live Story curators from fewer than 10 people to more than 40 people in that time, according to Schwerin.That can be a lot of money for one advertiser to fork over for a 24-hour ad. But Snapchat also sells the ad spots in the same story to multiple sponsors if needed. Each story has four ad spots, and the price for each spot changes depending on where it’s placed. Spots near the beginning of the story go for more money as they’re more likely to be seen.

The model appears to be working. Snapchateliminated its original ad unit, Brand Stories, earlier this year, but Schwerin expects the Live Stories business to keep growing. “It’s still a relatively new product and we’ve been focused on content [so far] but I think you’re going to see a lot more ads in the future,” he said.

Sponsorship opportunities actually play a big role in which events Snapchat chooses to cover. Sometimes Snapchat will commit to doing a story first and look for an advertiser after. This was the case on Wednesday when Activision sponsored Snapchat’s E3 Live Story, touting its new Call of Duty game.

In other cases, an advertisers will pitch an event they’d like to sponsor, prompting Snapchat to set it up, said Schwerin.

In addition to Live Stories, Snapchat has a section of the app called Discover for publishers like CNN and ESPN to showcase short videos and stories each day. Ads are sold alongside the content.

Those ads were crazy expensive when they first launched, and have since returned to more competitive levels. Schwerin said Snapchat plans to continue expanding the Live Stories feature, especially around politics and what he called “local stories,” or events that will only be visible to people in a specific geographic area. (Snapchat is already running a few of these.)

With a polarizing subject like politics, Snapchat could easily turn off parts of its user base depending on how stories are presented. This is why Snapchat has been hiring journalists for its curation team, including longtime CNN political reporter Peter Hamby, who has been attending events in person to get a better feel for how the story should come together. Hamby even posts his own snaps to the story to add context and explain what’s happening.

“We want people to learn about this [political] process, to demystify it a bit,” Schwerin said. “Why are people going to Iowa? Not a lot of young people know that.”

 

 

[“source-recode.net”]