by Matt Kapko

Is There Any Digital Marketing Value in New Breed of Social Apps?

Apr 24, 20146 mins
E-commerce SoftwareInternetMarketing

The road to revenue for ephemeral and anonymous apps like Snapchat, Secret and Whisper is uncharted. How these social apps will ever achieve a level of revenue that would justify their sky-high valuations is foggy at best.

As the debate rages on over how much a retweet or like is really worth, an entirely new crop of social media apps are sprouting up with hardly any marketing value attached to them at all.

After focusing on growing their user base for many years, the stalwarts of social media — Facebook, Twitter, LinkedIn and others — have begun to hit their stride with growing revenue streams thanks to a burgeoning class of ad products that deliver a clear return on investment for advertisers.

Of the new crop of anonymous and ephemeral social apps, Snapchat has the best chance to succeed as a digital marketing tool. (Image credit: Reuters)

The path to revenue for ephemeral and anonymous apps like Snapchat, Secret, Whisper and Tinder is less defined. If any of these new social apps succeed in making revenue, they will have to travel down roads less traveled. After all, stickers and other quick-revenue schemes will never justify the sky-high valuations many of these companies are attracting among investors.

[Related: 15 Social Media Apps You May Not Know About]

“These new entrants and these native social environments have really rich, built-for-mobile experiences with the potential for great ad units,” says SocialWire CEO Bob Buch. How these apps get to that point and whether brands will ultimately flock to these platforms en mass is still unclear though.

Snapchat Leads the Pack

Snapchat, the obvious leader in social ephemerality, has made the most progress in opening up its platform as a new playground for advertisers. Major brands like McDonald’s, Taco Bell, Juicy Couture and HBO have taken advantage of Snapchat’s “stories” feature to broadcast their snaps to all users.

“Snapchat allows communication. You identify yourself on Snapchat. That makes it easier for marketers. That’s where Snapchat wins.”

— Cameron Yuill, angel investor

Unlike traditional snaps, which can be shared with friends in real-time and appear for no longer than 10 seconds before they are removed from the recipient’s device, stories can stay visible for 24 hours and be replayed numerous times before they disappear.

But for all the innovation and new use cases made possible by Snapchat, the company is sharing very little about its plans for making money. “In-app transactions followed by advertising, that’s the plan we’re sticking to,” Evan Spiegel told Forbes earlier this year. “It’ll make sense in a Snapchat way … but it will not be stickers.”

Snapchat and others like it aren’t doing themselves any favors by encouraging brands to purchase ads that disappear without so much as a hint of targeted advertising involved. But they do bring others advantages to the table.

In Snapchat’s case, it can effectively guarantee engagement because users must keep their finger on a photo or video to view it.

[Related: Why Snapchat Will Never Be Worth $3 Billion]

“Snapchat is a platform that ultimately allows communication,” says Cameron Yuill, an angel investor and entrepreneur in the ad tech space. “You identify yourself on Snapchat. That makes it easier for marketers to market to & I think that’s where Snapchat wins.”

Where’s the Value in Anonymity

Yuill says he sees very little runway for advertising within the framework of anonymity, however. Whisper and the latest Silicon Valley phenomenon Secret are designed around the premise that users will share more when they are unassociated with their identities and hopefully more truthful, albeit controversial with what they share.

“On Secret, if your identity is kept secret is there any real value for marketers there? I don’t think any marketer wants their brand to be alongside someone talking about their sex life.”

— Cameron Yuill, angel investor

While he and others are fascinated by the conversations taking place on Whisper and Secret, Yuill concludes that Secret in particular is “just a huge time waster” that no brand marketer wants to touch.

“On Secret, if your identity is kept secret is there any real value for marketers there?” Yuill says. “The things that I see people responding to on Secret are generally controversial topics. I don’t think any marketer wants their brand to be alongside someone talking about their sex life or that sort of thing.”

A ‘New Wave’ of Marketing Evolution

Buch takes a more positive view, calling these anonymous and ephemeral social apps “strong identity platforms” because of their capability to match phone numbers and email addresses with actual users at the point of initial contact. “You’re always logging into Secret and so they always know in a much stronger way who you are, and therefore the ways they can target you is much stronger and more compelling than the open web,” he says.

[Related: Social Media Getting More Spontaneous and Less Personal]

“It’s really a new wave of marketing evolution,” Buch says, adding that he remains confident in the capability to monetize these apps once they reach critical scale and begin innovating more frequently with ad products unique to their respective platforms. “The real value is going to be down the road. It’s going to be first-party data.”

While the business propositions for Tinder and Secret remain fluid, Whisper is beginning to experiment with ads based on the keywords users include in their posts. For example, brands who purchase the rights to specific keywords on Whisper could encourage users to include one of their branded images as a background for their post.

Still, the inherently anonymous nature of all activity on Whisper is why Yuill and many others don’t buy into this approach as a viable business model. “From a pure marketer point of view I don’t see how you can move from anonymity and the sorts of things being posted. It just doesn’t fit,” he says. “Where’s the value on each of the users if you’re supposedly anonymous?”

Like other pioneers of social media that got their start years ago, each of these apps are young enough and have enough funding to focus on growing a massive audience for months or years to come.

Only time will tell if any of these ephemeral or anonymous apps will become businesses in their own right. However until that time comes, the executives and investors backing these companies may be hoping for acquisition offers from the big dogs that have already cracked the code for revenue in social media.

Matt Kapko covers social media for Follow Matt on Twitter @mattkapko. Email him at Follow everything from on Twitter @CIOonline and on Facebook.