Snapchat's new augmented reality revenue stream
How Snapchat turned AR Lenses into an ad product in 2018, and what sponsored lenses meant for brands and marketers.
First published on Medium in April 2018. The original text is kept as written, with spelling fixed. Images credited to other sites are linked rather than copied.
2026What happened next
Sponsored AR lenses did become a lasting ad format, and brand lenses are now a normal part of a campaign rather than a novelty. The bigger shift was who builds them: tools like Lens Studio moved creation from agencies to creators, which is the same thing I saw building a filter myself in an hour.
The original post · April 2018
Snapchat’s Augmented Reality (AR) growth and focus have been really impressive and recently they launched a killer AR feature called ‘Shoppable AR Promotions’.
Shoppable AR Promotions
Shoppable AR Promotions could give Snapchat a massive new revenue stream. Given the fantastic adoption of Snapchat and its high user engagement, brands are seeing this new feature as an ideal way to launch new products as well as a way to drive in-app product purchases, promote video advertising or even install other apps.
Last February Snapchat tested in-app product sales when they worked with Nike to launch the new Air Jordan’s in the app.
The official release was later in March, but Nike wanted to do something extra special in celebration of the 30th anniversary of Michael Jordan’s slam dunk in 1988. Using a geo-fenced promotion and a custom QR code they were able to create the buzz they wanted and large amounts of pre-sales as the new shoe was launched.
Early Brand Adoption
Snapchat has extended the above shoppable promotions test and linked it to their very popular interactive AR lenses. Brands can now drive brand awareness as well as surprise and delight users with a fun AR experience before promoting a real world product purchase in the app.
Four big brands are planning on debuting the new AR feature:
- Adidas will sell its Deerupt runner shoe
- Clairol will sell a Color Crave Hair Makeup
- King will push installs of its Candy Crush app
- STX will link its lens to a trailer of Amy Schumer’s new movie I Feel Pretty
Massive AR Engagement
According to Snap Inc, AR lenses are used by more than 70 million users and roughly half of all young US users engage with them every day. That’s a massive amount of AR engagement and this will only grow with new campaigns from big brands like Nike, King, Adidas etc.
Snapchat Director of Revenue Product Peter Sellis said in a statement:
“Shoppable AR lenses give brands a new way to leverage our unique scale — more than half of the 13-34 year-old population of the U.S. plays with our AR lenses each week on average — to drive real and measurable ROI, whether that’s through sales, downloads, lead gen or video views,”
https://www.bizjournals.com/losangeles/news/2018/04/18/snapchat-makes-ar-lenses-shoppable.html
Snapchat New Revenue Streams
Snapchat plans to make money from brands in three new ways.
- Shoppable AR promotions will be available through the face and world lenses that are shown when you open the camera. Placement here will done via a bidding process that begins at $100 a day.
- Advertisers can also buy a lens targeted toward a specific audience that is accessible directly through the main camera function. This will obviously be seen by a massive number of snapchat users. Placement here starts at $40,000 a day with a pre-negotiated CPM (price per thousand users)
- Companies can also pay extra to be the first lens in the list of lenses that are shown. Details of this pricing structure are not yet available.
Its also not currently understood what commissions Snapchat will get from in-app sales of real-world products like the trainers and cosmetics shown in the above examples. This could provide a 4th new revenue stream over time.
Tools For Brands
In December Snapchat released Lens studio and it’s been getting great adoption with creatives and big brands that want to build AR features on the popular Snapchat platform without the need for custom AR apps.
This has allowed developers, marketing teams and creatives to build amazing AR experiences and release them simply and easily on the platform. This is either done via snapcodes on traditional media channels or digitally through promoted advertising.
Traditional Media Extension
See this print to AR campaign from MacDonalds below that augments the famous McDonalds cap and badge on prospective employees.
With this new shoppable AR feature brands can extend their traditional campaigns with a snapcode to drive purchases, app installs or higher engagement through a video.
New campaign flow using ‘Shoppable AR Promotions’, the customer:
- Views traditional brand campaign (poster, billboard, tv advertising)
- Scans snapcode
- Enjoys fun AR lens experience in Snapchat
- Purchases product directly from Snapchat
Conclusion
Given Snapchat’s great partnership with brands, the healthy adoption of AR on the snapchat platform, the extensive toolchain for brands and the ability for marketing teams to extend existing campaigns I think this new feature could drive large amounts of incremental revenue for Snapchat.
Snapchat’s augmented reality growth has been fantastic and these new revenue streams will only continue to fuel new AR research and feature development on its platform.