Snap Inc.: One More Walled Garden, But Endless Opportunities for Brands

Media companies will have to play by Snapchat’s rules if they want their content to appear within the walled garden of the app.

In a classic coming-of-age tale, everyone’s favorite disappearing photo company has matured beyond its application roots and outgrown the “chat” in its name.

Snapchat now refers exclusively to the popular photo-sharing app that revolutionized the selfie, and it only represents one arm of the newly minted Snap Inc., a “camera company.”

The sleeker name is meant to reflect the company’s evolution beyond social, citing the release of Spectacles as its entry into hardware.

In a time when fewer and fewer platforms are identifying as “social,” Snap Inc.’s expansion represents its progression into something bigger. CEO Evan Spiegel is no longer simply dominating the messaging app scene; he is building a new ecosystem.

Snapchat has been one to watch since 2013, when then-23-year-old Spiegel turned down a $3 billion offer from Facebook for his fledgling photo messaging app.

Three years later, the app boasts 150 million daily users who send more than 1 billion snaps and view over 10 billion videos daily. In any given day, Snapchat reaches 41 percent of all 18- through 34-year-olds in the U.S. To put that into perspective, the average top 15 television networks reach only 6 percent of that same demographic.

With such impressive engagement rates, transitioning into product development is a logical next step for the company. As an app, Snapchat is bound by the cameras available in smartphones and boxed into a fixed user experience. The only way to avoid being a one-hit-wonder app is to control more of the Snapchat experience, starting with the camera itself.

Producing a phone-independent camera allows Snap Inc. to create a unique user experience and solidifies its position as an independent walled garden. The truth is, Snapchat transcended social in 2015 with the launch of Discover, when it began dabbling in content curation and ceased to be about merely chatting.

Spectacles may be the company’s latest and greatest offering, but they ultimately represent a steppingstone along the company’s path to autonomy. Spectacles should get advertisers excited not necessarily about the product itself, but about the greater implications they present for Snap Inc.

The company is in the process of becoming a triple threat–software, content and now hardware–and just like any self-sufficient walled garden, it has begun to make its own rules.

Spiegel reportedly wants to change the way Snapchat works with Discover partners by paying publishers a flat licensing fee upfront, and then keeping the ad revenue. This model resembles traditional TV distribution deals, in which networks buy programming upfront, further distancing Snap Inc. from being a company that is inherently social.

Such a shift will give the company full control over its ad inventory, which many cite as a strategic move preceding an initial public offering as early as March.

Media companies will have to play by Snapchat’s rules if they want their content to appear within the walled garden of the app.

For now, both Snapchat and Spectacles are still just toys, according to Spiegel. But the very expansion from software and content into hardware proves that these so-called toys are just the building blocks of a larger empire that has all of the potential to rival Apple’s immense success.

Chandler Sopko is a marketing coordinator at social media advertising agency Adaptly.