Snapchat’s Viacom Deal Is a Sign It’s About to Go Mainstream
Snapchat may be getting closer to its Facebook moment.
Viacom’s newly announced advertising deal with the highly valued messaging service offers more proof that Snapchat is nearing an inflection point—the moment it tips from niche youth product into the mainstream, much as Facebook did in 2007.
That was just one year after Facebook signed a deal with Microsoft, another example of a fast-growing startup and an industry giant allying themselves in hopes of mutual benefit. At the time, Facebook had 9 million registered users and was looking to Microsoft to help it expand its advertising offerings. (For all you Internet history buffs: everyone thought the sweeter deal went to Google, which agreed to serve ads to 100 million MySpace users. It didn’t turn out so well.) The deal didn’t end up making much money for either Facebook or Microsoft, which served up mostly lame remnant ads. But just as Viacom has missed its big Internet opportunity, Microsoft missed social. The deal gave Redmond a strategic window into the service, and the next year, Microsoft was able to make a $240 million investment in the company.
In 2009, when the deal expired, Facebook did not renew it, instead building out its own advertising products and salesforce. Snapchat may follow a similar playbook, allowing Viacom to act as its salesforce while CEO Evan Spiegel focuses on nailing the product and increasing the number of people who use it.
During a quarterly earnings call, the struggling entertainment company announced it’d struck a deal with Snapchat to sell ads on its behalf, add more channels to Snapchat’s Discover platform, and give Snapchat special access to Viacom-sponsored events like the Video Music Awards on MTV. Viacom, at least, believes Snapchat is on the brink of hitting the mainstream. As cable viewership and revenues sag, Viacom is doubling down on Snapchat as a way to reach young people–the 100 million folks Snapchat claims to host every single day, most of whom are still teens.
So what’s in it for Snapchat? CEO Evan Spiegel likely sees an immediate way to hand off ad-selling. Building an advertising business is a lot of work. Although Snapchat has been creative in the types of ad formats with which it has experimented, so far it has avoided banners ads and limited the data advertisers can use to target users.
Regardless, Viacom’s investment is yet another sign that Snapchat is gaining momentum—and attention.