Snap Gets More Serious About E-Commerce With Context Cards

by Trefis Team
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Earlier this week, Snap Inc. (NYSE:SNAP) announced a new feature called Context Cards that provide users with more information about Snaps (photos and videos) shared on its platform, while opening up some new avenues for monetization for the company. The feature was developed using technology from Vurb, a mobile search company that Snap acquired for over $100 million last year. The feature allows Snapchat users to swipe up on an individual Snap to get a pop-up display that contains additional information such as the venue, reviews, and directions. Snap has also partnered with other companies including OpenTable, which will allow users to make restaurant reservations, and Uber and Lyft, which give users the option of hailing a ride to the location. The company says that it intends to increase the number of partners on the platform, while also expanding the various actions users can take. Context Cards work with Snaps that are tagged with Snapchat’s Geofilters or are shared in a public feed.

See Our Full Model And Analysis For Snap Here

We believe that Context Cards could help Snap’s business in multiple ways.  Firstly, it could help to improve engagement levels, as users can get more information without having to leave the app for another service such as Google or Yelp. There is also a possibility that the feature could help Snap evolve from being just a messaging and social media application into a tool for discovering new products and services, as Snapchat users share millions of snaps a day, often from businesses such as restaurants and retail stores. Search-based advertising is very profitable for Internet companies, and it’s possible that Snap is trying to take some steps into this space.

Context Cards could also tie into the company’s recently launched Snap Maps feature, which allows users to see their friend’s real-time location along with a heat map of public snaps. Snap could also garner a significant amount of data from a user’s interaction with context cards, allowing it to improve the targeting of its ads. The feature could also open up a new revenue stream for Snap, as it could charge its partners a commission for each booking or transaction carried out via its platform. If Snap is able to scale up this opportunity, it could be quite lucrative given the company’s relatively young and affluent user base, which is located primarily in developed markets.

Trefis has a $15 price estimate for Snap, which is roughly in line with the current market price.

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