What is the biggest difference between Pinterest and Snapchat profitability?

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Editor's note: Dalton Caldwell, founder of paid social networking app.net, discussed his knowledge of Pinterest and Snapchat in this article. The two biggest difference is that users in their use scenarios have varying degrees of willingness to purchase.

Online advertising is mostly about motivation, right? If you want to quantify the value of the purchase, it can be done from a single search battalion. In 2006, Google's revenue for thousands of searches was 45 dollars, and by 2009 the figure was 35 dollars.

Also, be aware that Google's search ads are less intrusive. We can compare it to YouTube video ads. The ad on YouTube is either to insert a play queue, you have to watch the ad to see the positive, or you can set up an area in the playback screen to put the ads. First of all do not consider advertisers how hard mind is to do more interactive advertising, ECPM This indicator contrast, video ads than search ads are much lower.

In this I do not want to spend time discussing the eCPM of different media, the key point is: Some platform ads in the user behavior, is naturally more than other ways have a higher ability to become present. Regardless of the background is how much advertising technology, customer segmentation after the precise marketing, or in the advertising style to do more creative and so on, the user is in what context to see ads, which has decided that the starting line of each player is completely different.

Why compare Pinterest and Snapchat?

The two recent valuations are similar. Pinterest a period of time before the financing of 200 million valuations amounted to 3.8 billion U.S. dollars. Snapchat recently valued 3.6 billion dollars.

The intention of advertisement purchase on Pinterest

Think about what the user did in the early days of Pinterest, and I'm optimistic about Pinterest's future as a company supported by advertising (revenue). Pinterest can be used to help you organize and collect things that interest you in your life. And a large part of it is used to make the things that you have the will to own and buy. This is equivalent to the core of the user experience, has a lot of natural purchase intention. I even guessed that after the Pinterest launch of promoted pins commercial advertising, the average person will not notice is advertising.

The intention of advertisement purchase on Snapchat

Snapchat is relatively difficult. If you adopt the advertising model, what will be the specific style? Push the coupon to the user for a limited limit? or do you want to display ads directly on Snapchat's originally very simple UI? But you already have the judgment, the best form of advertising is the kind that can use the good Snapchat have been cultivated by user habits. It's that these things are fleeting and you have to act quickly.

Assuming that the future Snapchat has its own very consistent with the product of the commercial advertising form, but Snapchat users will have the behavior of consumer advertising? Snapchat is a new kind of communication medium, it is very valuable. However, other communications media such as telephones, emails or text messages, in this medium to push advertising consumers are generally very objectionable. For example, people don't like telemarketing, EDM or marketing messages.

So why are there approximate valuations?

The chart below is the ranking of the APP store in the U.S., where downloads and rankings are linearly related.

Snapchat more than Pinterest. Of course, the Pinterest is full platform, the single move out of the contrast is not very appropriate. But considering such a valuation formula, these two true valuations will be of the same rank:

Valuation = growth Rate x Revenue potential X's strategic value to potential buyers

(substituting rate) x (hypothetical revenue potential) x (strategic value to potential acquirers) = Late Stage Private valuation

According to the above analysis, Snapchat in the revenue potential is inferior to Pinterest, but in terms of growth rate and the strategic value for potential acquirers, that Snapchat more advantages. This is similar to the idea of why Snapchat so much money:

As with Instagram, the valuation of such applications is largely not determined by how much money it can now make, but by how much the Facebook makes up for Snapchat, or when Facebook buys Snapchat, Snapchat Can use the latter's users and traffic to make more money to decide. A similar example is Youtube, which has not earned a penny when it operates independently, and is still making a lot of money for Google after being heavily bought by Google.