Key Elements of the Business Model of Snapchat

1. Alaysha Ortiz Morales
APRIL 26, 2023
E N T E R T A I N M E N T B U S I N E S S M O D E L S

2. Famous by their app called Snapchat, social
media that allows users to send and receive
photos, videos and messages that disappear
after short periods of time.
Snap Inc. was founded in 2011 by Evan Spiegel,
Bobby Murphy and Reggie Brown, since then
the company has grown rapidly and has
expanded its offering beyond just Snapchat.
Snap Inc. today offers a suite of products and
services that includes social media, content
marketing and advertising, and Augmented
Reality (AR).
Snap Inc. (n.d.). https://www.snap.com/en-US

3. "We contribute to human progress by
empowering people to express themselves, live in
the moment, learn about the world, and have fun
together."
Snap Inc. (n.d.). https://www.snap.com/en-US

4. People who are constantly engaging with
People who are constantly engaging with
their fans in a unique, private, and
their fans in a unique, private, and
creative way, these customers are key to
creative way, these customers are key to
Snapchat since they enforce the
Snapchat since they enforce the
engagement of users in the platform.
engagement of users in the platform.
Content Creators and
Content Creators and
Influencers
Influencers
This customer is looking forward to take
This customer is looking forward to take
advantage of the young audience that
advantage of the young audience that
frequently uses Snapchat to promote
frequently uses Snapchat to promote
their business in a non intrusive way by
their business in a non intrusive way by
filters, AR lenses and story ads.
filters, AR lenses and story ads.
Advertisers and Brands
Advertisers and Brands
People who are looking for a fun space
People who are looking for a fun space
to share memories while also enjoy the
to share memories while also enjoy the
ephemeral features.
ephemeral features.
Gen Z & Millennials
Gen Z & Millennials

5. 01
Advertising is the key
source of revenue of Snap
Inc., which is why the
company has developed
efficient ways for
companies to advertise
themselves on the
platform.
02
Snap Inc. truly invest on
the continuous
development and
improvement of its main
product Snapchat by
introducing new features,
filters, lenses, tools to keep
users engaged and keep
the algorithm in the
advertiser's advantage.
03
Snap Inc. has created a
robust AR platform that
enables experiences for
Snapchat through their
lenses and filters.
04
Constant use of data analysis
to understand users'
behavior and preferences in
order to improve the
platform and services. Their
main analytics are based on
user engagement and ad
performances.

6. Snap Inc. invests in technology infrastructure
that facilitates the company to develop and
operate its flagship social media platform. It
includes hardware, software systems, and
cloud computing resources provides by
Amazon Web Services.
01
Technology Infrastructure
In order to understand users behavior and
preferences, Snap Inc. relies heavily on the
collection of information. This helps the
company to develop, improve, and provide a
better service and user experience.
03
Data Analysis
The company has developed a significant
portfolio that includes patents, trademarks,
copyrights, and trade secrets. This asset
protects Snap Inc.'s technology and provides
an advantage in the marketplace.
02
Intellectual Property
Snap Inc. relies on engineers and employees
to maintain operating the platform and the
services they provide. The company invests in
employee development and training ensuring
that the workforce’s remain skilled and up-to-
date with the latest technologies and industry
trends.
04
Employees
Snap Inc. 2022 Annual Report. (2023)
Snap Inc. Q4 2022 Earning Slides. (2023)

7. The company relies on a robust
technology infrastructure,
including computing resources
provided by Amazon Web
Services to develop, operate,
and maintain its product and
services.
Infrastructure & Cloud
Services
Snap Inc. partners with media
companies, publishers, and
content creators to distribute
content on Snapchat. The
company incurs cost related to
licensing and acquiring
content.
Content Acquisition
The company incurs costs
related to salaries, wages,
benefits, and other
compensations for its
employees from a total of
expense of $168 million.
Employees
Snap Inc. is a subject to a
variety of legal and regulatory
requirements, including privacy
regulations, intellectual
property laws and regulatory
compliance, including legal
fees and fines.
legal & Regulatory
compliance
Snap Inc. invest around $365
million in research and
development, this includes new
features and functionalities for
Snapchat as well as the AR
platform.
Research & Development
With a $355 million expenses,
this costs not only relates to
sales & marketing, but also
invests in events, sponsorships
and other marketing initiatives.
Sales & Marketing
Snap Inc. 2022 Annual Report. (2023)
Snap Inc. Q4 2022 Earning Slides. (2023)

8. Based on the 2022 Annual Report of Snap Inc.,
the main sources of revenue:
Snap Inc. 2022 Annual Report. (2023)
Snap Inc. Q4 2022 Earning Slides. (2023)
"Other Revenue"
category includes
revenue from
Spectacles, a
hardware product, as
well as developer
support services.
Advertising Revenue Other Revenue

9. Based on the 2022 Annual Report of Snap Inc., the
company is not currently profitable. The report states that
the company had a net loss of $1.266 billion in 2022,
compared to a net loss of $1.975 billion in 2021.
The primary reason for the company's continued losses is
due to its significant investments in research and
development, as well as its ongoing efforts to expand its
user base and advertising business. The company also
notes that it expects to continue to invest heavily in these
areas in the future, which may impact its profitability in
the short term.
However, it is worth noting that the company's revenue
has been steadily increasing over the past few years,
which suggests that its investment in these areas may
eventually pay off in the form of increased profitability.
Additionally, the company has a strong balance sheet with
significant cash reserves, which gives it some flexibility in
terms of its investment strategy.
Snap Inc. 2022 Annual Report. (2023)
Snap Inc. Q4 2022 Earning Slides. (2023)

10. Snap operates in a highly competitive industry,
and to remain successful, the company will need
to continue to innovate and stay ahead of its
competitors. This may involve the development of
new products and features, as well as the
exploration of emerging technologies such as
augmented reality and artificial intelligence.
Innovation:
The company's success is largely dependent on
the size and engagement of its user base. Snap
will need to continue to attract new users and
retain existing ones through the development of
innovative and engaging features and
experiences.
User growth and engagement:
As a company that is currently not
profitable, Snap will need to continue to
carefully manage its finances and make
smart investments that can help it achieve
its long-term goals.
Financial management:
Advertising is currently the primary source
of revenue for Snap. The company will
need to continue to grow and diversify its
advertising business by offering new ad
formats, targeting options, and
measurement capabilities to advertisers.
Advertising revenue:

11. AOrtizMorales@student.fullsail.edu