Have you used snapchat? Swipe left from the main screen and I'm shown 4-5 advertisements right away. User engagement + advertisements = bills paid.
Users' appetite for more ads will, in 100% of cases, diminish before shareholder appetite does.
spoken like someone who hasn't used the product. snapchat's ads fit the format amazingly well, and now that snapchat is also paying for content directly everyone's incentives are aligned to make a deeply engaging product that monetizes well without alienating users.
I have. I'm saying that especially when public, there is no such thing as enough profitability. There's no number of ads that will satisfy shareholder demands. They'll have to squeeze more and more and the only possible signal that "more" has become "too much" is necessarily when users start walking away from the service.
It's not necessarily just ads. There's content. Aston Kutcher in a recent podcast talked about "vertical video" meaning people develop content specifically aimed at mobile users watching on a portrait phone. Snapchat is primed to deliver that content. Saying that there are not enough ads is like saying YouTube was a terrible buy for Google.
With enough ads, it does.
(And you can also try and leverage it to get VCs to pay your bills.)
With enough ads user engagement also goes down. If Snapchat pushes it too far it will drive users off the platform and onto the next "cool" thing.
I think that to some extent decrease in engagement due to ads is a constant. Some engagements are larger than others and can handle that decrease.
As it stands now, you need to actively choose to play an ad, and that's how the impression is made. This is why Snapchat commands a higher CPM, because the user is actively in front of the screen.
However, I never look at the ads and instead stick to my friend's user generated content. Once ads are forced on users, they will jump ship.