Snapchat, which recently rebranded itself into Snap, Inc., has big plans for its future. To help its path forward, it is planning a big change to the way it pays out the content publishers who work with it. As reported by Recode, Snapchat will now pay upfront sums to the approximately two-dozen brands that use its Discover section. In return, it will claim all ad revenue generated by the ads run on Discover content.
Previously, Snapchat and its publishers split ad revenue, with the social media app reportedly pushing its partners to reach certain guaranteed payouts. This model, according to Recode, required Snapchat’s sales team to work together with the respective sales teams of its publishers, and specific agreements apparently varied from deal to deal.
Now, however, Snapchat wants to keep all Discover ad revenue for itself, and it plans to pay flat fees to its publishing partners to compensate them. This new model has multiple potential benefits. For one, Recode surmises that assuming control of all Discover ad inventory will smooth Snapchat’s transition to the initial public offering it is reportedly planning. In addition, the new agreements would resemble TV, and Snapchat seems eager to court TV networks and film studios for Discover content. Adopting a familiar ad model will sweeten the app’s overtures toward those types of companies.
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The big question is whether the existing Discover brands will bristle at this sharp change. The app has spent the past few weeks informing publishers of the impending shift, and according to Recode, the response has been split, with some companies amenable to the new terms and others unhappy over the prospect of creating content while having no control over its sales.
Recode says new deals for Discover could be put in place over the next month. Snapchat declined to comment on the tech outlet’s report.
