As social media companies push for new ways to monetize their user bases, Snapchat is becoming the latest to test ad-free subscriptions to drive recurring revenue.
As pointed out on Meta’s Threads app by one Australian Snapchat user, Jonah Manzano, and shared by several media outlets, the company’s new ad-free tier, available Down Under, costs nearly three times as much as its standard Snapchat+ offering. The move comes months after Android Police noted a similar plan being tested in Norway.
The move comes as part of Snapchat’s broader push to try out new subscription options. Earlier this month, for instance, code was spotted in the app showing that the company was apparently testing a “Friends & Family Plan” for its subscription program.
“Since we launched [Snapchat+], we’ve reached more than 5 million subscribers in the period. So, we’ve had really nice momentum there,” Snapchat parent company Snap’s CFO Derek Andersen told analysts on the company’s earnings call last month. “[It’s] becoming a much more meaningful contributor. … [We’re] really pleased with what we’re seeing there in terms of uptake and what that’s contributing to the business, both from a top line and margin perspective.”
Across the industry, social media companies are looking to subscription models to monetize their followings amid changing advertising regulations. Last month, X, formerly known as Twitter, announced three subscription levels for X Premium, Basic, Premium and Premium+, ranging from $3 to $16 a month (or $32 to $168 annually), depending on available features. TikTok, too, is testing an ad-free monthly subscription plan.
Also last month, Meta shared that it is introducing paid, ad-free monthly subscriptions to Facebook and Instagram in the European Union, the European Economic Area and Switzerland as data privacy regulations on the continent become more restrictive. However, for now, it is reportedly unlikely that such a subscription program would make its way to the United States.
Overall, these moves come as evolving data privacy regulations affect social media platforms’ ability drive ad revenue, prompting new ways of approaching monetization.
Additionally, while these apps have proven popular sites of product discovery, few consumers are shopping directly from social media platforms’ shops. The study “Tracking the Digital Payments Takeover: Monetizing Social Media Edition,” created by PYMNTS Intelligence in collaboration with Amazon Web Services (AWS), which draws from a survey of nearly 3,000 U.S. consumers, finds that only 14% buy goods and services via social media. Yet 43% of consumers browse social media to find goods and services — a key draw when it comes to ad sales.
Yet social media subscriptions may not be a top priority for many consumers, especially in periods of financial challenges. The PYMNTS Intelligence study “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” created in collaboration with Mastercard and drawing from survey of more than 2,100 U.S. consumers, found 50% would cancel their membership subscriptions if they were unable to pay all their bills. In contrast, only 19% would prioritize paying these bills in full over others.