DJ Khaled on the cover of Bloomberg Bussiness magazine
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On a Wednesday in early February, Khaled Khaled, a 40-year-old record producer from Miami, stepped into the garden of his temporary residence at the Beverly Hills Hotel in Los Angeles. As he does most mornings, he gave thanks for another day on earth. “Good morning,” he said to no one in particular. “Bless up.”
Snapchat photo filters
DJ Khaled, as he’s more commonly known, was once a minor figure in the music world, a creator of radio-friendly hip-hop hits and the host of a nightly show on one of Miami’s top FM stations. The rap on Khaled was that he could attract talented collaborators but wasn’t much of a musician himself. “Mostly, he just incessantly screams dumb catchphrases,” one Pitchfork reviewer complained. “And he doesn’t even do that particularly well.” This sort of thing weighed on Khaled. The critics, the haters, the people who’ve ignored his career—they didn’t want him to be in such a beautiful garden.
“I love my angels,” Khaled said, admiring the red, white, and purple cyclamens at the hotel. He saw God in those perennials. He also saw a metaphor for his own life’s journey. Khaled sees metaphors everywhere, actually, which is a major key—or as he prefers to type it out, “major
”—to his success on Snapchat, the social network where he has amassed some 6 million followers since last October. “Life is like flowers,” he observed, training his iPhone camera at the ground and holding down the record button. “You grow. You blossom. You become great.” He posted the 10-second video to Snapchat, then repaired to his bungalow to further philosophize on the power of positive thinking, hard work, and the divine. That went out to his Snapchat followers too, in a continuous series of clips.
If you want to understand Snapchat, the insanely fast-growing and—to people born before 1990—straight-up insane messaging app and media platform, DJ Khaled is your Virgil. If you were one of the 100 million people who logged in to Snapchat each day during Super Bowl weekend, his thick beard and full frame were impossible to miss. You would have seen clips of him at an impromptu concert where he was mobbed by several hundred screaming fans waving giant cardboard keys, or at a raucous party sponsored by PepsiCo, or in a pedicab he hailed after the game. “Ride wit me through the journey [to] more success,” he captioned that last video, as his chauffeur pedaled furiously.
Khaled had never heard of Snapchat when a friend suggested he check it out last year. While taking a break from touring last fall, he gave it a shot. “I didn’t really know how to use it,” he says on a recent afternoon in Los Angeles. “I was kind of just talking to myself.” Khaled filmed everything: his grooming routine, his breakfasts, his hot tub, and, especially, a Tuscan-style lion sculpture that he would often shout at while watering his plants. Mostly, he gave advice. He expounded on the importance of quality bedding (“The key to more success is to have a lot of pillows”) and regular meals (“They don’t want you to eat breakfast”). His most dramatic Snapchat moment occurred during a twilight ride on a personal watercraft in Biscayne Bay. “The key is to make it,” he repeated as he got lost on the water. Then he turned the camera on himself and added, “The key is not to drive your Jet Ski in the dark.”
Khaled made it, and since that fateful night he’s been pretty much the hottest ticket in media—the guy who’s figured out the digital property everyone wants a piece of but no one quite understands. He’s palled around with Snapchat co-founder Evan Spiegel, created Snapchat videos on behalf of Cîroc vodka, and signed a deal to host a weekly radio show on Apple Music’s flagship station, Beats 1. His catchphrases have occasioned explainers from otherwise serious news organizations, including Time, Quartz, and–
–Bloomberg Businessweek. “DJ Khaled has completely cracked the platform,” says Emmanuel Seuge, senior vice president for content at Coca-Cola, one of Snapchat’s major advertisers. “He’s the king of Snapchat.”
“The vast majority of people reading this article will have a Snapchat account within 36 months”
Compared with Twitter or Facebook, Snapchat can seem almost aggressively user-unfriendly. If you’re new to the app and looking for posts by your kid, your boyfriend, or DJ Khaled, good luck. It’s hard to find somebody without knowing his or her screen name. This is by design. “We’ve made it very hard for parents to embarrass their children,” Spiegel said at a conference in January. “It’s much more for sharing personal moments than it is about this public display.”
Spiegel, who declined to be interviewed, has been cagey about Snapchat’s business prospects. Its annual revenue is small—perhaps $200 million, according to several press reports—but it has already drawn many big-name advertisers. Earlier this year, PepsiCo, Amazon.com, Marriott International, and Budweiser paid more than $1 million to have their ads appear within the company’s Super Bowl coverage, according to a person familiar with the deals. And because Snapchat has yet to really try to sell ads to the small and midsize businesses that make up most of Google’s and Facebook’s customer base, there’s a lot of potential.
Featured in Bloomberg Businessweek, Mar. 7, 2016. Subscribe now.
Photographer: Julian Berman for Bloomberg Businessweek
As Facebook has transformed from a slightly wild place to a communications tool for parents, teachers, and heads of state, Snapchat’s more playful ethos, and the fact that anything posted on it disappears in 24 hours, has made it the looser, goofier social network. “You’re sending this ephemera back and forth to your friends,” says Charlie McKittrick, the head of strategy at Mother New York, an ad agency. “It’s the detritus of life. But it’s really funny.” Last September, while Mark Zuckerberg hosted Indian Prime Minister Narendra Modi on Facebook’s campus, the big news at Snapchat’s offices in Venice was a feature called Lenses, which makes your selfies look like you’re vomiting a rainbow.
Snapchat is just the sort of place where DJ Khaled, in his uninhibited glory, could find an audience. Vice called his Jet Ski adventure “the greatest sitcom episode ever filmed.” Elite Daily, the “voice of Generation Y” news site, raved, “If You’re Not Following DJ Khaled On Snapchat Already, You’re Buggin’.” In December, Khaled posted to Snapchat while getting his iPhone fixed at an Apple Store. Soon he was surrounded by fans. “It was unreal,” he says. “My Snapchat has more viewers than any TV show.”
That’s an exaggeration, but not by much. Khaled’s videos attract 3 million to 4 million viewers each. Given how Snapchat skews overwhelmingly tween to late-millennial, that means about the same number of young people are watching him admire flowers as are watching the biggest network sitcoms. According to Nielsen, roughly 3.3 million people age 12-34 watch The Big Bang Theory.
Even bigger than the videos posted by Khaled and Kylie Jenner—the platform’s other big star, with 10 million followers—are Snapchat’s own Live Stories. These are mashups of news events culled from the feeds of Snapchat users and produced by the company’s 100-person content team of producers, editors, and a handful of journalists, who sometimes add commentary or contribute more footage. The biggest Live Stories segments—for instance, New York’s 2015 Snowmageddon and the Coachella music festival—can draw viewership in the tens of millions. Snapchat Discover, a collection of slickly produced feeds, attracts audiences in the millions. The company says users watch roughly 8 billion videos on its platform each day, about the same number as Facebook, which has 10 times as many users as Snapchat. On a given day, according to Nielsen, 41 percent of adults in the U.S. under 35 spend time on Snapchat.
“Everybody from 14 to 24 in America, it’s either the No. 1 or No. 2 app in their lives,” after Instagram, says Gary Vaynerchuk, an angel investor and entrepreneur. Actually, it’s not just an American phenomenon: Snapchat is a top 10 most-downloaded app in about 100 countries, according to market researcher App Annie. Vaynerchuk, who has investments in Snapchat, Twitter, and Facebook, likens the excitement to that of television in the early 1960s. “The vast majority of people reading this article will have a Snapchat account within 36 months,” he says. “Even if, as they’re reading this, they don’t believe me.”
Snapchat photo filters
DJ Khaled, as he’s more commonly known, was once a minor figure in the music world, a creator of radio-friendly hip-hop hits and the host of a nightly show on one of Miami’s top FM stations. The rap on Khaled was that he could attract talented collaborators but wasn’t much of a musician himself. “Mostly, he just incessantly screams dumb catchphrases,” one Pitchfork reviewer complained. “And he doesn’t even do that particularly well.” This sort of thing weighed on Khaled. The critics, the haters, the people who’ve ignored his career—they didn’t want him to be in such a beautiful garden.
“I love my angels,” Khaled said, admiring the red, white, and purple cyclamens at the hotel. He saw God in those perennials. He also saw a metaphor for his own life’s journey. Khaled sees metaphors everywhere, actually, which is a major key—or as he prefers to type it out, “major
If you want to understand Snapchat, the insanely fast-growing and—to people born before 1990—straight-up insane messaging app and media platform, DJ Khaled is your Virgil. If you were one of the 100 million people who logged in to Snapchat each day during Super Bowl weekend, his thick beard and full frame were impossible to miss. You would have seen clips of him at an impromptu concert where he was mobbed by several hundred screaming fans waving giant cardboard keys, or at a raucous party sponsored by PepsiCo, or in a pedicab he hailed after the game. “Ride wit me through the journey [to] more success,” he captioned that last video, as his chauffeur pedaled furiously.
Khaled had never heard of Snapchat when a friend suggested he check it out last year. While taking a break from touring last fall, he gave it a shot. “I didn’t really know how to use it,” he says on a recent afternoon in Los Angeles. “I was kind of just talking to myself.” Khaled filmed everything: his grooming routine, his breakfasts, his hot tub, and, especially, a Tuscan-style lion sculpture that he would often shout at while watering his plants. Mostly, he gave advice. He expounded on the importance of quality bedding (“The key to more success is to have a lot of pillows”) and regular meals (“They don’t want you to eat breakfast”). His most dramatic Snapchat moment occurred during a twilight ride on a personal watercraft in Biscayne Bay. “The key is to make it,” he repeated as he got lost on the water. Then he turned the camera on himself and added, “The key is not to drive your Jet Ski in the dark.”
Khaled made it, and since that fateful night he’s been pretty much the hottest ticket in media—the guy who’s figured out the digital property everyone wants a piece of but no one quite understands. He’s palled around with Snapchat co-founder Evan Spiegel, created Snapchat videos on behalf of Cîroc vodka, and signed a deal to host a weekly radio show on Apple Music’s flagship station, Beats 1. His catchphrases have occasioned explainers from otherwise serious news organizations, including Time, Quartz, and–
“The vast majority of people reading this article will have a Snapchat account within 36 months”
Compared with Twitter or Facebook, Snapchat can seem almost aggressively user-unfriendly. If you’re new to the app and looking for posts by your kid, your boyfriend, or DJ Khaled, good luck. It’s hard to find somebody without knowing his or her screen name. This is by design. “We’ve made it very hard for parents to embarrass their children,” Spiegel said at a conference in January. “It’s much more for sharing personal moments than it is about this public display.”
Spiegel, who declined to be interviewed, has been cagey about Snapchat’s business prospects. Its annual revenue is small—perhaps $200 million, according to several press reports—but it has already drawn many big-name advertisers. Earlier this year, PepsiCo, Amazon.com, Marriott International, and Budweiser paid more than $1 million to have their ads appear within the company’s Super Bowl coverage, according to a person familiar with the deals. And because Snapchat has yet to really try to sell ads to the small and midsize businesses that make up most of Google’s and Facebook’s customer base, there’s a lot of potential.
Featured in Bloomberg Businessweek, Mar. 7, 2016. Subscribe now.
Photographer: Julian Berman for Bloomberg Businessweek
As Facebook has transformed from a slightly wild place to a communications tool for parents, teachers, and heads of state, Snapchat’s more playful ethos, and the fact that anything posted on it disappears in 24 hours, has made it the looser, goofier social network. “You’re sending this ephemera back and forth to your friends,” says Charlie McKittrick, the head of strategy at Mother New York, an ad agency. “It’s the detritus of life. But it’s really funny.” Last September, while Mark Zuckerberg hosted Indian Prime Minister Narendra Modi on Facebook’s campus, the big news at Snapchat’s offices in Venice was a feature called Lenses, which makes your selfies look like you’re vomiting a rainbow.
Snapchat is just the sort of place where DJ Khaled, in his uninhibited glory, could find an audience. Vice called his Jet Ski adventure “the greatest sitcom episode ever filmed.” Elite Daily, the “voice of Generation Y” news site, raved, “If You’re Not Following DJ Khaled On Snapchat Already, You’re Buggin’.” In December, Khaled posted to Snapchat while getting his iPhone fixed at an Apple Store. Soon he was surrounded by fans. “It was unreal,” he says. “My Snapchat has more viewers than any TV show.”
That’s an exaggeration, but not by much. Khaled’s videos attract 3 million to 4 million viewers each. Given how Snapchat skews overwhelmingly tween to late-millennial, that means about the same number of young people are watching him admire flowers as are watching the biggest network sitcoms. According to Nielsen, roughly 3.3 million people age 12-34 watch The Big Bang Theory.
Even bigger than the videos posted by Khaled and Kylie Jenner—the platform’s other big star, with 10 million followers—are Snapchat’s own Live Stories. These are mashups of news events culled from the feeds of Snapchat users and produced by the company’s 100-person content team of producers, editors, and a handful of journalists, who sometimes add commentary or contribute more footage. The biggest Live Stories segments—for instance, New York’s 2015 Snowmageddon and the Coachella music festival—can draw viewership in the tens of millions. Snapchat Discover, a collection of slickly produced feeds, attracts audiences in the millions. The company says users watch roughly 8 billion videos on its platform each day, about the same number as Facebook, which has 10 times as many users as Snapchat. On a given day, according to Nielsen, 41 percent of adults in the U.S. under 35 spend time on Snapchat.
“Everybody from 14 to 24 in America, it’s either the No. 1 or No. 2 app in their lives,” after Instagram, says Gary Vaynerchuk, an angel investor and entrepreneur. Actually, it’s not just an American phenomenon: Snapchat is a top 10 most-downloaded app in about 100 countries, according to market researcher App Annie. Vaynerchuk, who has investments in Snapchat, Twitter, and Facebook, likens the excitement to that of television in the early 1960s. “The vast majority of people reading this article will have a Snapchat account within 36 months,” he says. “Even if, as they’re reading this, they don’t believe me.”
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Jimmy ValenTime
A really good Lawyer
Just a year ago, Snapchat was primarily known as a disappearing-message app useful for sending nude photos to lovers and lewd doodles to friends. “The people’s champ of smartphone peep shows,” this magazine put it in 2013. When Spiegel turned down a reported $3 billion buyout offer by Facebook, the then 23-year-old was mocked in the press and even by members of his own board. “If you knew the real number” offered by Facebook, Sony Pictures Chief Executive Officer and Snapchat board member Michael Lynton confessed in an e-mail that was leaked as part of the 2014 Sony hack, “you would book us all a suite at Bellevue,” the New York hospital with the famous psychiatric ward.
In late 2014, when Spiegel unveiled the company’s business plan—for a minimum of $750,000, a big brand such as Coke or Pepsi could get short video ads to run in the app for one day—he was again derided for being out of touch. “It’s like how the Kardashians are famous because they’re famous,” says Ben Winkler, the chief investment officer for the media buying firm OMD. “Snapchat is expensive because it’s expensive.” Of course, that’s another way of saying it’s expensive because lots of people want to buy it. “Almost every editor has put me in a chokehold to find out how they can get on the platform,” says Joanna Coles, the editor-in-chief of Cosmopolitan, and since December a Snapchat board member.
Snapchat, which was most recently valued at $16 billion, doesn’t look or feel like any normal form of communication. Open the app, and you’re confronted by a full-screen viewfinder that looks a lot like your phone’s regular camera app. Mysterious abstract icons hover in corners. Swiping right reveals your messages. This is where committed users send hundreds of selfies a day to their friends, annotating them with emojis or doodles, or applying one of Snapchat’s constantly changing collection of rainbow-vomit-type filters.
Swiping left gets you to the meat of the app: stories. These are short video clips that run in a series and disappear within 24 hours. You, your friends, and people you follow, like DJ Khaled, can post. The upper half of the screen is devoted to variations on stories: the day’s Snapchat-produced Live Stories, as well as Snapchat Discover. There are 20 Snapchat Discover channels, each produced by established media brands such as People, CNN, ESPN, and the Wall Street Journal, as well as up-and-comers such as Vice, BuzzFeed, and Refinery29. Coles’s Cosmo channel is on Discover, as is Sweet, a publication run by the magazine’s parent company, Hearst.
Discover partners generally post 10 or more videos a day on its channels. App users can tap a channel icon to start watching the stream, and tap again to skip to the next clip. Or, if they’re intrigued by a clip, they can swipe up to watch a longer version or read an article. No matter how they tap or swipe, users stay in the app. Links to the Web aren’t allowed. Publishers love not having to compete with a steady stream of links from other publishers, as on Facebook or Twitter, and advertisers love that users actually seem to watch the ads. Since last year, Snapchat has broadened its advertiser base by introducing less-expensive products. Today, buying time on Discover costs $20 per thousand views—more than twice what an ad goes for on Facebook and Instagram. The proceeds are split between Snapchat and its media partners.
Snapchat brand stories
The number of Discover slots is limited—right now it’s just the 20 that fit on one Snapchat screen—and competition among media brands is fierce. In July, Snapchat dropped Yahoo! even though Spiegel had personally recruited Katie Couric, Yahoo’s lead news anchor. BuzzFeed got that slot. Snapchat declines to explain why it bounced Yahoo, but traffic to the channel was reportedly poor. Shortly after replacing Yahoo on Discover, BuzzFeed CEO Jonah Peretti disclosed that 21 percent of his company’s overall audience came from Snapchat, a share exceeded only by Facebook and BuzzFeed’s own website and apps.
For less-established companies, getting a Discover slot can be transformative. “That was a dramatic moment in the life of our company,” says Steven Kydd, a co-founder of Tastemade, a four-year-old media startup focused on food and travel videos. Since joining Discover in August, Tastemade has added 20 employees, raised an extra $40 million in venture capital, and reoriented itself around Snapchat. Tastemade started out producing videos primarily for YouTube, then expanded to Facebook, Instagram, and Apple TV. To be eligible for Snapchat’s Discover feature, not only did Tastemade have to produce even more videos, it also needed them to work on a smartphone screen, which is more complicated than it sounds. “This,” Kydd says, pointing at a TV mounted vertically on the wall in Tastemade’s studio in Los Angeles, “is how millennials view content.”
The company built a set, specifically designed for vertical videos, that’s roughly 15 percent skinnier than a standard set and has cameras turned on their sides. Tastemade still has to fill up the other platforms, so it shoots the rest of its videos horizontally on high-resolution cameras, while keeping the action in the middle third of the screen so the footage can also run on Snapchat. TV monitors in the studio are marked with black tape that shows the Snapchat version’s frame. Afterward, segments are edited into multiple cuts: vertical for Snapchat, square for Instagram and Facebook, horizontal for YouTube and Apple TV. “Everything in the industry is designed around landscape video, so to do portrait you kind of have to hack the process,” says Jay Holzer, Tastemade’s head of production.
Days at Tastemade begin with an hourlong story meeting focused on the following day’s Snapchat edition. “Believe it or not, we try to treat this a little bit like a newsroom,” says Oren Katzeff, the programming chief, as a dozen editors and producers sit down in a conference room and open their laptops. The main item on the agenda one February morning is Cookie the News. It’s a series made specifically for Snapchat that uses sped-up video to depict the creation of a current events-themed sweet—for instance, a butter cookie frosted to look like Ziggy Stardust, to commemorate the death of David Bowie. (Cookie the News’s tagline: “Don’t read it. Eat it.”) “We try to cover things that are fun and that can also be turned into a great cookie,” Katzeff says.
The first pitch of the morning focuses on the German shorthaired pointer that just won the Westminster Kennel Club Dog Show. Dogs are cute, everyone agrees. But someone mentions that a giraffe cookie, pegged to the sighting of a rare subspecies in a Tanzanian national park, bombed several weeks earlier. “I think this falls into that category,” another producer says. “Unless we can do something different with the cookie itself.”
“Could you do a dog cookie that the dog could eat?” someone asks, before the idea is mercifully put to sleep.
The group runs through other proposals: cookies of Adele at the Grammys, the Sports Illustrated swimsuit issue, the Chinese government’s reported forced resettlement of ethnic minorities, all nixed. Finally, someone mentions a flaw in Apple software that can cause iPhones to “brick,” or be permanently disabled. An iPhone-shaped cookie getting crushed by a brick is approved.
History suggests that cookie-based media, and Snapchat in general, may be a fad. In 2013, several viral video companies thrived, thanks to a knack for being able to rank highly in Facebook’s News Feed by using teasing headlines. For a time, it worked; Upworthy, for example, saw traffic hit nearly 90 million unique users. But Facebook changed its News Feed, consumers tired of the click bait, and traffic sank. “Facebook changed and we adapted,” says Upworthy co-CEO Peter Koechley.
Before he helped start Tastemade, Kydd was an executive vice president of Demand Media, which ran content farms, websites that cranked out posts by the thousands on a daily basis. Posts had little informational value—for instance, “How to Put on a Speedo” was a classic—but they generated huge traffic, and ad revenue, by exploiting a quirk in the way Google handled search queries. The company went public in 2011 and peaked at a valuation of roughly $2 billion—at the time, about 25 percent more than that of the New York Times. Then Google updated its algorithm, and Demand Media’s traffic collapsed. Today its market capitalization is roughly $100 million, and it has a new management team. Kydd notes that Tastemade has always focused on high-quality content.
In late February, Snapchat announced it would provide detailed demographic information about users through Nielsen’s digital ratings service, a welcome development for some advertisers wary of the hype. “Snapchat is awfully expensive, and there’s pretty much a lack of data and visibility,” says Thom Gruhler, a marketing vice president at Microsoft. Another complaint: Meetings with Snapchat executives are rare. “Whether it’s Imran [Khan, Snapchat’s chief strategy officer] or Evan, it’s like getting an audience with the pope,” says an executive at one of the largest ad agencies. With Facebook and Twitter, the big agencies get as many meetings as they want.
Snapchat declined to comment on this critique, but it has informed media buyers that it plans to improve ad targeting and measuring while promising a more hands-on approach. And in February it struck a deal to allow Viacom to sell ads on Snapchat’s behalf. “They’re in the midst of growing up,” says Carrie Seifer, president for digital at Starcom MediaVest Group.
For now, that’s been enough. Advertisers don’t have a lot of good options to reach under-30s. The audiences of CBS, NBC, and ABC are, on average, in their 50s. Cable networks such as CNN and Fox News have it worse, with median viewerships near or past Social Security age. MTV’s median viewers are in their early 20s, but ratings have dropped in recent years. Marketers are understandably anxious, and Spiegel and his deputies have capitalized on those anxieties brilliantly by charging hundreds of thousands of dollars when Snapchat introduces an ad product. OMD’s Winkler calls this a “shrewd strategy” that “instantly elevates the conversation—often to the CMO level,” which means that Snapchat ad buys are often subject to less budgetary scrutiny than normal. “Every CMO’s kid is using it,” says Starcom’s Seifer.
When Snapchat sales reps have called on advertisers, they’ve typically spent more time with creative teams than with media buyers, says David Gaines, chief planning officer at Maxus Global, a media buying agency. “I’ll be honest, I had no idea what they were talking about half the time,” he says of a Snapchat training session he attended. But Gaines is quick to add that he’s a Snapchat believer, because it offers the chance to create ads that look like they belong on a mobile phone, not like miniaturized TV commercials. “The digital producers will come to us and say, ‘Wow, we saw Snapchat this week, and they’re teaching us things we don’t even know about our own jobs,’ ” he says.
“Snapchat is awfully expensive, and there’s pretty much a lack of data and visibility”
In December, Khan traveled to Chicago to meet with executives at PepsiCo’s Gatorade division. Over drinks at Soho House, he proposed a Super Bowl collaboration using a new advertising product inspired by the weird selfie lenses. The result was a video filter that for two days allowed users to send clips that looked like someone was dumping a bucket of orange Gatorade over their heads. Neither Snapchat nor Gatorade would comment on price, but reports put it between $450,000 and $750,000 per day. The videos of virtual drenchings were watched more than 160 million times. “We think it was a fantastic collaboration,” says Kenny Mitchell, who helps lead Gatorade’s new media marketing. He adds that he expects to work more with Snapchat in the coming year.
DJ Khaled, too, hopes to collaborate more closely with Snapchat. In November he became one of the first owners of an Official Stories account, designed to make it slightly easier for Snapchat newbies to find celebrities. Rather than a blue check mark, as on Facebook and Twitter, celebrities get a unique emoji next to their name. Khaled’s, naturally, is a
. He also recently pitched Spiegel some ideas for using Snapchat to showcase music, an area where it has struggled.
For now, he’s got the deals with Cîroc and Apple Music, as well as his online clothing store, where you can buy “Major
” T-shirts and flip-flops that say “Bless” on the left foot and “Up” on the right, but he’s trying not to overdo it on paid tie-ins. “When you’re successful, the money chases you,” he says. “You don’t have to chase the money.”
Through the bluster is a hint of anxiety, common enough among moguls and artists, that maybe the magic is fleeting. That’s heightened by the knowledge that everything on Snapchat today will be gone tomorrow. Khaled sometimes saves his best posts. “I don’t save them all,” he says. “Just the classic ones.
In late 2014, when Spiegel unveiled the company’s business plan—for a minimum of $750,000, a big brand such as Coke or Pepsi could get short video ads to run in the app for one day—he was again derided for being out of touch. “It’s like how the Kardashians are famous because they’re famous,” says Ben Winkler, the chief investment officer for the media buying firm OMD. “Snapchat is expensive because it’s expensive.” Of course, that’s another way of saying it’s expensive because lots of people want to buy it. “Almost every editor has put me in a chokehold to find out how they can get on the platform,” says Joanna Coles, the editor-in-chief of Cosmopolitan, and since December a Snapchat board member.
Snapchat, which was most recently valued at $16 billion, doesn’t look or feel like any normal form of communication. Open the app, and you’re confronted by a full-screen viewfinder that looks a lot like your phone’s regular camera app. Mysterious abstract icons hover in corners. Swiping right reveals your messages. This is where committed users send hundreds of selfies a day to their friends, annotating them with emojis or doodles, or applying one of Snapchat’s constantly changing collection of rainbow-vomit-type filters.
Swiping left gets you to the meat of the app: stories. These are short video clips that run in a series and disappear within 24 hours. You, your friends, and people you follow, like DJ Khaled, can post. The upper half of the screen is devoted to variations on stories: the day’s Snapchat-produced Live Stories, as well as Snapchat Discover. There are 20 Snapchat Discover channels, each produced by established media brands such as People, CNN, ESPN, and the Wall Street Journal, as well as up-and-comers such as Vice, BuzzFeed, and Refinery29. Coles’s Cosmo channel is on Discover, as is Sweet, a publication run by the magazine’s parent company, Hearst.
Discover partners generally post 10 or more videos a day on its channels. App users can tap a channel icon to start watching the stream, and tap again to skip to the next clip. Or, if they’re intrigued by a clip, they can swipe up to watch a longer version or read an article. No matter how they tap or swipe, users stay in the app. Links to the Web aren’t allowed. Publishers love not having to compete with a steady stream of links from other publishers, as on Facebook or Twitter, and advertisers love that users actually seem to watch the ads. Since last year, Snapchat has broadened its advertiser base by introducing less-expensive products. Today, buying time on Discover costs $20 per thousand views—more than twice what an ad goes for on Facebook and Instagram. The proceeds are split between Snapchat and its media partners.
Snapchat brand stories
The number of Discover slots is limited—right now it’s just the 20 that fit on one Snapchat screen—and competition among media brands is fierce. In July, Snapchat dropped Yahoo! even though Spiegel had personally recruited Katie Couric, Yahoo’s lead news anchor. BuzzFeed got that slot. Snapchat declines to explain why it bounced Yahoo, but traffic to the channel was reportedly poor. Shortly after replacing Yahoo on Discover, BuzzFeed CEO Jonah Peretti disclosed that 21 percent of his company’s overall audience came from Snapchat, a share exceeded only by Facebook and BuzzFeed’s own website and apps.
For less-established companies, getting a Discover slot can be transformative. “That was a dramatic moment in the life of our company,” says Steven Kydd, a co-founder of Tastemade, a four-year-old media startup focused on food and travel videos. Since joining Discover in August, Tastemade has added 20 employees, raised an extra $40 million in venture capital, and reoriented itself around Snapchat. Tastemade started out producing videos primarily for YouTube, then expanded to Facebook, Instagram, and Apple TV. To be eligible for Snapchat’s Discover feature, not only did Tastemade have to produce even more videos, it also needed them to work on a smartphone screen, which is more complicated than it sounds. “This,” Kydd says, pointing at a TV mounted vertically on the wall in Tastemade’s studio in Los Angeles, “is how millennials view content.”
The company built a set, specifically designed for vertical videos, that’s roughly 15 percent skinnier than a standard set and has cameras turned on their sides. Tastemade still has to fill up the other platforms, so it shoots the rest of its videos horizontally on high-resolution cameras, while keeping the action in the middle third of the screen so the footage can also run on Snapchat. TV monitors in the studio are marked with black tape that shows the Snapchat version’s frame. Afterward, segments are edited into multiple cuts: vertical for Snapchat, square for Instagram and Facebook, horizontal for YouTube and Apple TV. “Everything in the industry is designed around landscape video, so to do portrait you kind of have to hack the process,” says Jay Holzer, Tastemade’s head of production.
Days at Tastemade begin with an hourlong story meeting focused on the following day’s Snapchat edition. “Believe it or not, we try to treat this a little bit like a newsroom,” says Oren Katzeff, the programming chief, as a dozen editors and producers sit down in a conference room and open their laptops. The main item on the agenda one February morning is Cookie the News. It’s a series made specifically for Snapchat that uses sped-up video to depict the creation of a current events-themed sweet—for instance, a butter cookie frosted to look like Ziggy Stardust, to commemorate the death of David Bowie. (Cookie the News’s tagline: “Don’t read it. Eat it.”) “We try to cover things that are fun and that can also be turned into a great cookie,” Katzeff says.
The first pitch of the morning focuses on the German shorthaired pointer that just won the Westminster Kennel Club Dog Show. Dogs are cute, everyone agrees. But someone mentions that a giraffe cookie, pegged to the sighting of a rare subspecies in a Tanzanian national park, bombed several weeks earlier. “I think this falls into that category,” another producer says. “Unless we can do something different with the cookie itself.”
“Could you do a dog cookie that the dog could eat?” someone asks, before the idea is mercifully put to sleep.
The group runs through other proposals: cookies of Adele at the Grammys, the Sports Illustrated swimsuit issue, the Chinese government’s reported forced resettlement of ethnic minorities, all nixed. Finally, someone mentions a flaw in Apple software that can cause iPhones to “brick,” or be permanently disabled. An iPhone-shaped cookie getting crushed by a brick is approved.
History suggests that cookie-based media, and Snapchat in general, may be a fad. In 2013, several viral video companies thrived, thanks to a knack for being able to rank highly in Facebook’s News Feed by using teasing headlines. For a time, it worked; Upworthy, for example, saw traffic hit nearly 90 million unique users. But Facebook changed its News Feed, consumers tired of the click bait, and traffic sank. “Facebook changed and we adapted,” says Upworthy co-CEO Peter Koechley.
Before he helped start Tastemade, Kydd was an executive vice president of Demand Media, which ran content farms, websites that cranked out posts by the thousands on a daily basis. Posts had little informational value—for instance, “How to Put on a Speedo” was a classic—but they generated huge traffic, and ad revenue, by exploiting a quirk in the way Google handled search queries. The company went public in 2011 and peaked at a valuation of roughly $2 billion—at the time, about 25 percent more than that of the New York Times. Then Google updated its algorithm, and Demand Media’s traffic collapsed. Today its market capitalization is roughly $100 million, and it has a new management team. Kydd notes that Tastemade has always focused on high-quality content.
In late February, Snapchat announced it would provide detailed demographic information about users through Nielsen’s digital ratings service, a welcome development for some advertisers wary of the hype. “Snapchat is awfully expensive, and there’s pretty much a lack of data and visibility,” says Thom Gruhler, a marketing vice president at Microsoft. Another complaint: Meetings with Snapchat executives are rare. “Whether it’s Imran [Khan, Snapchat’s chief strategy officer] or Evan, it’s like getting an audience with the pope,” says an executive at one of the largest ad agencies. With Facebook and Twitter, the big agencies get as many meetings as they want.
Snapchat declined to comment on this critique, but it has informed media buyers that it plans to improve ad targeting and measuring while promising a more hands-on approach. And in February it struck a deal to allow Viacom to sell ads on Snapchat’s behalf. “They’re in the midst of growing up,” says Carrie Seifer, president for digital at Starcom MediaVest Group.
For now, that’s been enough. Advertisers don’t have a lot of good options to reach under-30s. The audiences of CBS, NBC, and ABC are, on average, in their 50s. Cable networks such as CNN and Fox News have it worse, with median viewerships near or past Social Security age. MTV’s median viewers are in their early 20s, but ratings have dropped in recent years. Marketers are understandably anxious, and Spiegel and his deputies have capitalized on those anxieties brilliantly by charging hundreds of thousands of dollars when Snapchat introduces an ad product. OMD’s Winkler calls this a “shrewd strategy” that “instantly elevates the conversation—often to the CMO level,” which means that Snapchat ad buys are often subject to less budgetary scrutiny than normal. “Every CMO’s kid is using it,” says Starcom’s Seifer.
When Snapchat sales reps have called on advertisers, they’ve typically spent more time with creative teams than with media buyers, says David Gaines, chief planning officer at Maxus Global, a media buying agency. “I’ll be honest, I had no idea what they were talking about half the time,” he says of a Snapchat training session he attended. But Gaines is quick to add that he’s a Snapchat believer, because it offers the chance to create ads that look like they belong on a mobile phone, not like miniaturized TV commercials. “The digital producers will come to us and say, ‘Wow, we saw Snapchat this week, and they’re teaching us things we don’t even know about our own jobs,’ ” he says.
“Snapchat is awfully expensive, and there’s pretty much a lack of data and visibility”
In December, Khan traveled to Chicago to meet with executives at PepsiCo’s Gatorade division. Over drinks at Soho House, he proposed a Super Bowl collaboration using a new advertising product inspired by the weird selfie lenses. The result was a video filter that for two days allowed users to send clips that looked like someone was dumping a bucket of orange Gatorade over their heads. Neither Snapchat nor Gatorade would comment on price, but reports put it between $450,000 and $750,000 per day. The videos of virtual drenchings were watched more than 160 million times. “We think it was a fantastic collaboration,” says Kenny Mitchell, who helps lead Gatorade’s new media marketing. He adds that he expects to work more with Snapchat in the coming year.
DJ Khaled, too, hopes to collaborate more closely with Snapchat. In November he became one of the first owners of an Official Stories account, designed to make it slightly easier for Snapchat newbies to find celebrities. Rather than a blue check mark, as on Facebook and Twitter, celebrities get a unique emoji next to their name. Khaled’s, naturally, is a
For now, he’s got the deals with Cîroc and Apple Music, as well as his online clothing store, where you can buy “Major
Through the bluster is a hint of anxiety, common enough among moguls and artists, that maybe the magic is fleeting. That’s heightened by the knowledge that everything on Snapchat today will be gone tomorrow. Khaled sometimes saves his best posts. “I don’t save them all,” he says. “Just the classic ones.
Jimmy ValenTime
A really good Lawyer
Snapchat is worth 16 Billion and Khaled coming in for 900 percent 
REdefinition
Superstar
he's a clown
"They dont want you on the cover of Business Week."
I love Latina women
Veteran
You're the "They" he's talking about.he's a clown
dude motivates. he got a gift for that.
I remember the first time I heard that McDonalds sausage biscuit shyt he did. I bought 5 of them joints when I got off work.
was shytting cholesterol for a week, but it was worth it.
just gotta get him to talk about an actual message some kinda way.
nerd nikka reference, but Khaled is like a ghetto Kamina from Gurren Lagann. Your children will conquer the fukking world if he tells them they can.
I remember the first time I heard that McDonalds sausage biscuit shyt he did. I bought 5 of them joints when I got off work.
was shytting cholesterol for a week, but it was worth it.
just gotta get him to talk about an actual message some kinda way.
nerd nikka reference, but Khaled is like a ghetto Kamina from Gurren Lagann. Your children will conquer the fukking world if he tells them they can.
Jimmy ValenTime
A really good Lawyer
khaled could be a force for good but he trying to be the new tony robbins
I love Latina women
Veteran
ReturnOfJudah
Veteran
Arab with connects in the underworld. Nothing new here