Business Model of Snap Chat

This report throws light on the description of business of Snap Chat and the services that are provided by Snap Chat. It also elaborates on the business model of Snap Chat by making use of the nine building blocks. It explains the relationships that exists between these and the success factors that can help the company in attaining competitive advantage. It also expounds on the factors that can contribute to its downside risk and the changes that can be made to the business model so that it can succeed in the long run.

Running head: BUSINESS MODEL OF SNAP CHAT
Business Model of Snap Chat
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Running head: BUSINESS MODEL OF SNAP CHAT
Executive Summary
This report throws light on the description of business of Snap Chat and the services that are
provided by Snap Chat. It also elaborates on the business model of Snap Chat by making use of
the nine building blocks. It explains the relationships that exists between these and the success
factors that can help the company in attaining competitive advantage. It also expounds on the
factors that can contribute to its downside risk and the changes that can be made to the business
model so that it can succeed in the long run.

Running head: BUSINESS MODEL OF SNAP CHAT
Table of Contents
Description of the business and the service offered........................................................................4
Business Model Canvas of Snap Chat.............................................................................................4
Key Relationships between the Building Blocks.............................................................................6
Critical Success Factors that can help in its competitive advantage...............................................6
Factors contributing to downside Risk............................................................................................7
Recommendations for the business model of Snap Chat.................................................................8
References:......................................................................................................................................9

Running head: BUSINESS MODEL OF SNAP CHAT
Description of the business and the service offered
Snap Chat refers to a multimedia messaging app which is popular in the regions of North
America along with that of Europe. Evan Spiegel, Reggie Brown and Bobby Murphy were
responsible for creating this popular app. Principle feature pertaining to Snap Chat is that the
pictures along with messages can be visible only for a short amount of time and then they
become inaccessible. The app has undergone evolution from that of person-to-person photo
sharing to that of featuring stories based on 24 hour chronological content. Snap Chat has
become popular because it represents an innovative mobile-first direct ion pertaining to social
media (Piwek & Joinson, 2016). It lays stress on the aspect of the users interacting by taking
recourse to virtual stickers. The users can interact by the help of augmented reality object. Snap
Chat is renowned for having 187 million users who use it on every day basis. In the month of
September of the year 2016, it was renamed as that of Snap Inc. The first hardware gadget by the
name of Spectacles which was a sunglass having an in-built camera was launched in the year
2016 (Vugec, Spremić & Bach, 2018). Snap Chat is mainly used for the creation of multimedia
message and it consists of a photo or that of a short video. The snaps can be modified by
including different kinds of filters, text captions along with that of drawings. This report focuses
on the business model by making use of the nine building blocks. It also discusses about the
relationships between the building blocks and discusses the factors that will help the business in
attaining competitive advantage. It also expounds on the factors that can lead to the downside
risk of the company.
Business Model Canvas of Snap Chat
The nine building blocks of pertaining to the business model of Snap Chat are that of
customer segments, value propositions, channels, customer relationships, revenue streams, key

Running head: BUSINESS MODEL OF SNAP CHAT
resources, key activities, key partnerships and that of cost structure. The customer segment
mainly comprises of the demography who are between 13 and 34 year old. The young group of
people who are very impulsive are the major users of this service. The young demography wants
to communicate with the help of different social platforms and Snap chat proves to be the ideal
platform with the help of which they can maintain communication. They key partners of Snap
Chat comprise the investors, snap chat community, audience match API partners, Ads API
Partners, Creative API Partners and the Creative Partner (Xu et al., 2016). The key activities of
Snap Chat relates to R & D, product roadmap, software development, IT Operation, customer
service, m arketing and the public relations. They key resources comprise of Snap Chat that is a
photo messaging app and Spectacle that acts as a video sharing sunglass. There are around 150
millon daily users of the Snap Chat service. It has got features that can enhance the images and it
is also capable of stringing different chats together. The publisher tools of the app make it viable
among the young population (Makki et al., 2017). The value propositions of Snap Chat are
provided y the fact that reinvention of camera can act as a great opportunity and it can help in
improving te manner in which people communicate. Snap Chat helps in knowing the world so
that the people can indulge in pleasure. Customer Relationships are provide owing to the fact that
the user can choose to add different snaps in order to make a story that can be viewed by the
public who is following the particular user. The users can also send the private snaps to that of
other users. The photos along with videos can be seen for 10 seconds before they disappear. Snap
Chat can delete the private snaps just after when they are opened (Browne, OReilly &
Hutchinson, 2017). The different channels are Snap Chat app, Spectacles, Vending machines,
Advertising and the partners. The parent of Snap Chat can make money by the selling of access

Running head: BUSINESS MODEL OF SNAP CHAT
from the users to the advertisers. The advertising products of the company includes that of Snap
Ads along with Sponsored Creative Tools.
Key Relationships between the Building Blocks
The value propositions of Snap Chat like the innovative camera endear it to the young
demography who can derive entertainment from the exclusive features of Snap Chat. The young
demography who are impulsive can enjoy the features of the messaging app and the research and
development wing of Snap Chat caters to the demands of the new age consumer. The value
propositions of Snap Chat are maintained with the help of sales channels like API Partners and
Creative Partners (DuFour et al., 2017). In is latest strategy of moving towards automation Snap
Chat has made the marketing API available to all kinds of agencies and the developers. The Snap
Chat Partners Programme helped the companies in making use of API that can provide
satisfaction to the largest advertisers in the world. Snap Chat has opened up the marketing API
that can provide the developer with tools that can help in building the ad solutions of Snap chat
(Heider, Simões & Gram 2017). It can prove to be a great step for providing the customers with
best solutions. It can help n the process of strengthening the relationship with the customer. The
revenue is earned with the help of value proposition that is delivered to the customers of Snap
Chat. Different channels pertaining to Snap Chat like Spectacles and Vending Machines help n
earning profit for the messaging app.
Critical Success Factors that can help in its competitive advantage
Snap Chat mainly calls itself a company camera and it has done great amount of
innovations on the piece of hardware. It ca however be said that it is an app that can be thrown
way on one day. The platforms should have a longer life because there are switching costs that
are involved. They should continue to build new technologies so that the competitors cannot

Running head: BUSINESS MODEL OF SNAP CHAT
replicate their particular business idea. Snap Chat should focus on the aspect of building of
technology in relation to the underlying filters. They should make it the core of their business
strategy. A synergy with the Android can help in the development of the messaging app. Making
Android the default camera application on the smart phones can help in ensuring that the app
reaches billion of deice throughout the world (Anderson, 2015). They can also license the
software in order to include Canon and Nikon. It can help them in harnessing their own
ecosystem (Coffman, 2017). They can also turn the filters into that of a market place which can
help in allowing te developers. It can provide opportunities to the creators so that they can build
innovative fascinating new filter for the app of the camera. They can innovate it in such a manner
that it cannot be replaced and the customers would be attracted towards the app.
The revenue of Snap Chat comes from the arena of advertising and it was recorded that
Snap Chat was able to generate around $ 182 million in terms of revenue whereas on the other
hand Face Book was able to garner over $ 9.3 billion (Johnson, 2015). Snap Chat can create
something that is not related with anything of sharing they can create a niche market of its own.
In the future Snap Chat can be made use of to see what the other friends are doing. Snap Chat in
the future can make referrals to different restaurants and bars with the help of the app (Röös,
2016).
Factors contributing to downside Risk
Snap Chat has to operate with the help of mobile operating systems and networks that
they cannot control. Changes with the products or the operating system can harm the user growth
of Snap Chat app. Snap Chat boasts by calling itself a camera company but it does not own the
camera. Snap Chat is dependent on Google Android for hosting the app. Snap Chat is dependent
on Google Cloud for different kinds of services like computing and bandwidth. Disruption

Running head: BUSINESS MODEL OF SNAP CHAT
pertaining to Google Cloud Operation can harm the business of Snap Chat (Brisco, Whitfield &
Grierson 2016). Snap Chat is surrounded by powerful competitors and if they are not able to
improve the market share then their business would suffer. Snap Chat is surrounded by enemies
like that of Apple, Face Book, Twitter and You tube. Snap Chat is also competing with
companies in the arena of print and radio for underlying technologies like messaging. The loss of
key personnel of Snap Chat and the failure to retain qualified personnel can seriously harm the
business of the company (Billings et al., 2017). Snap Chat has an operating history that is short
and this makes it difficult for them to evaluate the prospects along with future financial result.
Snap Chat has been in the business for around five years and there are plenty of chances that this
thing may not work.
Recommendations for the business model of Snap Chat
Snap Chat has spent many years shunning the influence of social media inspite of huge
amount of interest from these people. The new business model of Snap Chat hat will focus on the
field of distribution along with monetization opportunities in relation to these creators.
Development of the eco system can allow the artists in transitioning from communicating with
friends to that of creating stories for serving a broad audience (Alyahya & Kausar, 2017). It can
monetize the stories and make use of professional tools for creating premium content.
Snap Chat is dependent on high-bandwidth video that does not load easily within the developing
world. Snap Chat wants to enhance the network effect and provide foundation for the future by
creating more users inspite of the challenges. Snap Chat has decided to increase the user base
and it wants the Android users to adopt the product more readily. Product improvements can be
made by streaming the architecture for the Story play back.

Running head: BUSINESS MODEL OF SNAP CHAT

Running head: BUSINESS MODEL OF SNAP CHAT
References:
Alyahya, T., & Kausar, F. (2017). Snapchat Analysis to Discover Digital Forensic Artifacts on
Android Smartphone. Procedia Computer Science, 109, 1035-1040.
Anderson, K. E. (2015). Getting acquainted with social networks and apps: Snapchat and the rise
of ephemeral communication. Library Hi Tech News, 32(10), 6-10.
Billings, A. C., Qiao, F., Conlin, L., & Nie, T. (2017). Permanently desiring the temporary?
Snapchat, social media, and the shifting motivations of sports fans. Communication &
Sport, 5(1), 10-26.
Brisco, R., Whitfield, R., & Grierson, H. (2016, April). Recommendations for the use of social
network sites and mobile devices in a collaborative engineering design project. In 18th
International Conference on Engineering & Product Design Education.
Browne, O., OReilly, P., & Hutchinson, M. (2017). Ephemeral Returns: Social Network
Valuations and Perceived Privacy.
Coffman, J. M. T. (2017). Today’s Technology: Using Snapchat to Connect Educators, Learners,
and Content. Southern Regional Council of Educational Administration, 17(2).
DuFour, A., Lajeunesse, K., Pipada, R., Xu, S., & Nomee, J. (2017). The effect of data security
perception on wearable device acceptance: a technology acceptance model. Proceedings
of Student-Faculty Research Day, D11, 1-6.
Heider, B., Simões, C. S., & Gram, C. (2017). Snapchat as an innovative service.

Running head: BUSINESS MODEL OF SNAP CHAT
Johnson, N. (2015). The Future of Marketing: Strategies from 15 Leading Brands on how
Authenticity, Relevance, and Transparency Will Help You Survive the Age of the
Customer. FT Press.
Makki, T. W., DeCook, J. R., Kadylak, T., & Lee, O. J. (2017). The social value of Snapchat: An
exploration of affiliation motivation, the technology acceptance model, and relational
maintenance in Snapchat use. International Journal of Human–Computer Interaction, 1-
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Piwek, L., & Joinson, A. (2016). “What do they snapchat about?” Patterns of use in time-limited
instant messaging service. Computers in Human Behavior, 54, 358-367.
Röös, K. (2016). The versatile use of social media in today's business environment.
Vugec, D. S., Spremić, M., & Bach, M. P. (2018). Integrating Digital Transformation Strategies
into Firms: Values, Routes and Best Practice Examples. In Management and
Technological Challenges in the Digital Age (pp. 119-140). CRC Press.
Xu, B., Chang, P., Welker, C. L., Bazarova, N. N., & Cosley, D. (2016, February). Automatic
archiving versus default deletion: what Snapchat tells us about ephemerality in design.
In Proceedings of the 19th ACM conference on computer-supported cooperative work &
social computing (pp. 1662-1675). ACM.