PUTTING THE WHERE IN SHARE

Snapchat turns lo­ca­tion-based ge­ofil­ters into a rev­enue source

Los Angeles Times - - BUSINESS - By Paresh Dave

Much of so­cial media in­volves show­ing off where we are, whether it’s watch­ing a ball­game at Dodger Sta­dium, meet­ing Mickey Mouse at Dis­ney­land or eat­ing a pas­trami sand­wich at Langer’s.

Now Snapchat Inc., the ubiq­ui­tous so­cial media app among teens, has found a way to cap­i­tal­ize on those lo­ca­tion brags.

The nearly 100 mil­lion daily users of the Venice start-up’s app chron­i­cle their lives through photos and videos that au­to­mat­i­cally dis­ap­pear af­ter view­ing. The im­ages can be per­son­al­ized in a va­ri­ety of ways, in­clud­ing with ge­ofil­ters, a spe­cial lo­ca­tion-based over­lay.

They bear the name of places along with a sym­bolic draw­ing — think beads in New Or­leans, dogs at Run­yon Canyon Park or sky­scrapers in down­town Los An­ge­les. In­tro­duced a year ago, the col­or­ful dig­i­tal stick­ers now dec­o­rate more than 1 mil­lion posts a day.

Snapchat is hop­ing to turn these lo­ca­tion­cen­tric dig­i­tal stick­ers into its sec­ond source of rev­enue by en­tic­ing busi­nesses to make their own ge­ofil­ters — for a fee. On Mon­day, McDon- ald’s be­came the first to spon­sor a ge­ofil­ter; cus­tomers at any U.S. lo­ca­tion can adorn their Snapchat posts with an il­lus­tra­tion of a dou­ble cheese­burger and an over­flow­ing pouch of fries, among other op­tions.

Com­pa­nies with big advertising bud­gets, whether fast-food chains, the­aters or re­tail­ers, will be the ini­tial fo­cus of these spon­sored ge­ofil­ters. Like it does with video ads, Snapchat and busi­nesses col­lab­o­rate on the de­sign.

“Snapchat is about sto­ry­telling and ge­ofil­ters are a fun, vis­ual way for Snapchat­ters to tell their friends where they are and what they’re up to,” Snapchat spokes­woman Mary Ritti said.

As so­cial media apps in­clud­ing In­sta­gram, Pin­ter­est and Twit­ter experiment with ways to gen­er­ate rev­enue, Snapchat’s ge­ofil­ter move is a clever one, es­sen­tially dis­guis­ing advertising as a fun and whim­si­cal add-on for users. As such, Snapchat and ad­ver­tis­ers hope ge­ofil­ters will be less in­tru­sive and more ef­fec­tive.

Jerry Shen, se­nior mar­ket­ing man­ager for the Pasadena-based Blaze Pizza chain, said he is in­trigued by the pos­si­bil­i­ties be­cause Snapchat is a pow­er­ful way to con­nect with teenagers and young adults.

“Ca­pa­bil­i­ties in the so­cial space like ge­ofil- ters, that help us to au­then­ti­cally con­nect with our fans, will ab­so­lutely be an op­por­tu­nity that we ex­plore,” he said.

Snapchat has been op­er­at­ing off more than $1 bil­lion in ven­ture cap­i­tal amassed over four years, but it be­gan run­ning ads in Oc­to­ber to get on the mon­ey­mak­ing track. So far, it’s mostly been in the form of 10-sec­ond video ads, which ap­pear as a com­mer­cial break in be­tween user­gen­er­ated and pro­fes­sional con­tent.

The ad­di­tional con­tent and the in­ter­spersed advertising are part of Snapchat Chief Ex­ec­u­tive Evan Spiegel’s broader growth strat­egy to move the com­pany be­yond a sim­ple mes­sag­ing plat­form. The 25-year-old has said he wants the app to be part of ev­ery­thing young peo­ple do on their phones, which could in­clude lis­ten­ing to mu­sic and play­ing games.

Snapchat de­clined to re­veal the cost and du­ra­tion of McDon­ald’s spon­sored ge­ofil­ter, but it charges busi­nesses $20 per 1,000 views of video ads on the app. McDon­ald’s didn’t re­spond to re­quests for com­ment. Paid-for stick­ers will be distin­guished with a tiny “Spon­sored” im­print.

Dane Gon­za­lez, a 21-year-old Snapchat user, said it’s “ob­vi­ous” that peo­ple will want to use busi­ness ge­ofil­ters.

Many photos on Snapchat, such as posts of Star­bucks cof­fee cups, al­ready in­clude lo­gos, he noted.

In De­cem­ber, Snapchat launched a web­site for any­one to pro­pose and de­sign a ge­ofil­ter and de­fine the area where it should be avail­able. The com­pany, which has five of its 330 em­ploy­ees work­ing on day-to-day ge­ofil­ter tasks, ap­proves one-third of sub­mis­sions based on qual­ity and for­mat­ting guide­lines.

Half of Snapchat’s sev­eral thou­sand ge­ofil­ters are user-gen­er­ated. Cal­i­for­nia has 500 ge­ofil­ters alone, in­clud­ing an LAX sticker for Los An­ge­les In­ter­na­tional Air­port that’s used 5,000 times per day. There are also ge­ofil­ters for spe­cial events, like the one avail­able Mon­day in Mi­ami as Jeb Bush an­nounced his can­di­dacy for pres­i­dent.

Gon­za­lez spent 10 hours in April de­sign­ing a ge­ofil­ter for his lit­tle-known Cen­tral Val­ley home­town of Han­ford.

“Big­ger cities will have mul­ti­ple ge­ofil­ters, and when you know your town doesn’t have one, it val­i­dates we don’t re­ally mat­ter,” he said. “I didn’t want that.”

He said skep­tics un­der­value Snapchat, whose re­puted val­u­a­tion ex­ceeds $15 bil­lion, and how an item as sim­ple as a ge­ofil­ter “can brighten up” some­one’s day. The stick­ers add char­ac­ter to posts while serv­ing as a source of civic pride.

Gon­za­lez gave the word “Han­ford” a paint­brushed look to re­sem­ble a rus­tic busi­ness sign. He sketched fa­cades of a down­town theater, au­di­to­rium and ice cream shop. And he placed a green lawn in front, sig­ni­fy­ing agri­cul­ture as the 55,000-per­son city’s foun­da­tion.

Four days later, he awoke to mes- sages from friends who had screen­shot­ted or were prais­ing his work of art.

“I can’t tell you how many peo­ple — dozens and dozens, crazy amounts — were so ex­cited that Han­ford fi­nally had a Snapchat ge­ofil­ter,” Gon­za­lez said. “It’s touched so many more lives than any­thing I’ve done.”

The New Or­leans ge­ofil­ter is so pop­u­lar that 20-year-old cre­ator Juan Pablo Madrid said sub­ur­ban res­i­dents com­plain that their neigh­bor­hoods are out­side the bound­aries for us­ing it.

To add a ge­ofil­ter, users swipe sev­eral times to the right af­ter tak­ing a photo or video. Lo­ca­tion-track­ing must be turned on, so the app knows which ones to make avail­able.

Even so, users said they wouldn’t find spon­sored ge­ofil­ters creepy in the way they do ads that au­to­mat­i­cally ap­pear on Face­book based on their in­ter­ests and char­ac­ter­is­tics. They see ge­ofil­ters as a more cre­ative way to share lo­ca­tion than other so­cial apps al­low.

Ti­mothy Sehn, Snapchat’s vice pres­i­dent of en­gi­neer­ing and the man who came up with the firm’s ge­ofil­ter con­cept in Jan­uary 2014, has de­voted nearly his en­tire Twit­ter feed to en­cour­ag­ing peo­ple to sub­mit their own ge­ofil­ters. See­ing the strong de­mand, Snapchat is ready to make ge­ofil­ters a more in­te­gral part of its busi­ness.

Tim Hickle, a dig­i­tal mar­ket­ing man­ager at brand­ing firm MilesHern­don, said many busi­nesses will want to ad­ver­tise through ge­ofil­ters.

View­ing friends’ Snapchat mes­sages from cool places al­ready en­tices peo­ple to visit, and “tak­ing that from text to a cre­ative sticker could be that ex­tra boost that turns it into a traf­fic­driv­ing ma­chine,” said Hickle, who helped de­sign a ge­ofil­ter that is avail­able in In­di­anapo­lis.

And he sees an op­por­tu­nity for ge­ofil­ters to even­tu­ally be­come a pur­chas­ing tool that could com­mand even more busi­nesses’ at­ten­tion.

“You see a friend post at a show tonight and with two taps, you buy a ticket to to­mor­row’s show,” Hickle said. “There is a lot of un­ex­plored po­ten­tial for ge­ofil­ters to help peo­ple lo­cate things they didn’t even know were there.” paresh.dave@latimes.com Twit­ter: @peard33 Times staff writer An­drea Chang con­trib­uted to this re­port.

Allen J. Schaben Los An­ge­les Times photo il­lus­tra­tion

SNAPCHAT GE­OFIL­TERS, which bear the name of places along with a sym­bolic draw­ing, in­clude one for Venice, left, over­lay­ing a photo of the board­walk, and for New Or­leans. Now McDon­ald’s is spon­sor­ing a ge­ofil­ter that can be used by its cus­tomers.

Juan Pablo Madrid

Bethany Mol­lenkof Los An­ge­les Times

Bethany Mol­lenkof Los An­ge­les Times

McDON­ALD’S has be­come the first advertiser to spon­sor a Snapchat ge­ofil­ter.

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