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Snapchat Could Be Borrowing This Facebook Tactic to Make Money

January 27, 2016, 9:05 PM UTC
A portrait of the Snapchat logo in Ventura
A portrait of the Snapchat logo in Ventura, California December 21, 2013. REUTERS/Eric Thayer (UNITED STATES - Tags: BUSINESS LOGO) - RTX17GXT
Photograph by Eric Thayer — Reuters

Ephemeral messaging Snapchat is best known for feature well-designed, bite-sized ad campaigns for major brands, but the startup might be eyeing mobile apps as advertisers after all.

The Venice, Calif.-based company is reportedly considering adding app installs as part of its advertising business, according to a report from The Information citing anonymous sources. The company has reportedly been discussing these plans with ad agencies.

Snapchat users will be shown a video ad, and if they swipe down on it, will be taken to either the iOS or Android app store where they’ll be able to download the app, according to the report. These ads could in theory be placed inside Live Stories, publicly available curated collections of users’ content around a place or event, or Discover channels. A year ago, Snapchat introduced Discover, a separate section inside its app where users can consumer bite-sized content and ads from brands and publishers.

Hoping to build a robust ad-supported business—and justify its $16 billion valuation—Snapchat has been actively experimenting with various ad products and formats, including traditional ads inside publisher content, and sponsored photo filters, stickers, and lenses. Snapchat reportedly charges between $450,000 and $750,000 per day for a sponsored lens.

The move into app installs would be both predictable and surprising for Snapchat. The category has been quite lucrative for other social media businesses, like Facebook (FB), so it would stand to bring in quite a bit of revenue for Snapchat. But with that said, emails made public from the Sony hack in late 2014 showed that co-founder and CEO Evan Spiegel has been rather critical of Facebook’s strategy, especially regarding app installs. These ads, he argued, are largely paid for by startups on a quest to acquire new users and spending venture capital money to do so. A downturn in the market could quickly affect the level of ad dollars spent on these ads, according to Spiegel.

Nevertheless, Snapchat is reportedly seeking to hit $300 million in revenue this year, up from $100 million in run rate it achieved in 2015, according to the report, so the pressure is on.

A Snapchat spokesman declined to comment.

An earlier version incorrectly stated the location of Snapchat’s office. The story has been updated.