As expected, more social platforms are now looking to provide higher-priced, ad-free subscription offerings, as a means to align with evolving data privacy regulations in the E.U. , while also testing the waters on just how many people might be willing to pay for an ad-free in-app experience.
Snapchat is the latest to test the waters on this, with a new, more expensive Snapchat+ tier that’ll remove most ads from your in-app experience.
As you can see in this example overview, shared by Jonah Manzano, some Snap users are now being offered a higher-priced Snapchat+ subscription tier, which removes all Story and Lens ads. Snapchat notes that subscribers may still see sponsored places, as well as paid promotions within My AI responses, where it’s currently testing the best ways to monetize its AI chat platform. But for the most part, users will be able to eradicate ads in the app, all for the low price of $15.99 AUD per month, which is equivalent to $US10.50.
(For comparison, the current Snapchat+ monthly package costs $US3.99, which approximates to the $5.99 AUD cost shown in the image above).
The option is seemingly not available in the U.S. as yet, and may never be, given Snap’s reliance on ad revenue from the North American market.
As you can see in these charts, Snap generates the vast majority of its revenue from American and Canadian users, and based on these figures as a guide, it could look to charge a higher amount for an ad-free tier in the U.S.
But it wouldn’t have to, necessarily. Given these are quarterly revenue numbers, that means that Snap would be earning less than $US3 per U.S. user per month from ad exposure, which would mean that charging $US11 per month for an ad-free option would more than offset any related losses.
That same calculation gets more complex for Facebook, which generates around $US6.30 per U.S. user/month based on ad revenue. But Snap’s ad business doesn’t bring in as much, which may provide more options on this front.
But still, the main focus is likely the E.U., and alignment with the latest E.U. regulations around data usage, and the capacity for European users to opt out of targeted ads if they choose.
Meta’s seemingly found a loophole in this new requirement, because by giving users an ad-free opt-out, even at a price, that actually ticks off this element, as users can then stop Meta from using their data for ad targeting, so long as they pay for the privilege. Meta would likely prefer that users don’t actually pay for this, and just keep enabling it to run its ad business instead. But by providing the option, that ensures that Meta’s meeting the new E.U. requirements on this front.
Meta’s ad-free option, which is only available to E.U. users are present, costs the equivalent of $US10.60 per month.
And while it may seem like this is part of a broader trend towards getting users to pay to use their apps, meeting E.U. requirements is likely the main focus, as most platforms can earn a lot more from ad exposure than they would from people paying for app access.
Because the truth is most people simply won’t pay, no matter what the charge may be.
We’ve already seen this with all of the various subscription options. Fewer than 0.5% of X’s users have signed up to X Premium thus far, while 0.67% of Snap users are paying for Snapchat+. Around 6% of LinkedIn users reportedly pay for LinkedIn Premium, while around 4% of YouTube users are signed up to YouTube’s Premium/Music offerings.
Each of these does now provide a valuable supplemental revenue stream for each respective platform. But they’re also nowhere close to generating what they bring in from ads.
And while each app will be interested to see how many people are willing to put their money where their mouth is, and pay to remove ads, the numbers would suggest that not many people are going to care enough to sign on at a monthly cost as an alternative.
But, if you really hate ads, maybe this is an option to consider, if and when each is actually rolled out to all users.
Snapchat says that the ad-free Snapchat+ offering is “rolling out slowly and may not be available to you just yet”.
More info on Snapchat’s ad-free subscription plan here.