Every now and then, Snapchat sends a holiday video to their users. The goal is for you to open the app, watch the video, and then explore the rest of Snapchat watching some ads 💰 along the way. Snapchat is marketing to their own users with a little reminder that the app still exists! Genius, but at what price? I've always wondered what it costs Snapchat to send holiday videos and if they are cost effective. Let's explore.

Snapchat Usage

First, we'll start with usage. As of 2019, Snapchat had 100 million users in the U.S. and Canada. Snapchat has more users, but they are in other countries that may not celebrate the same holidays. Also, 100 million is a nice round number so we'll stick with it. Roughly 63% of Snapchatters use the service daily. So, let's assume that 50% of that 100 million engage with the holiday video. If you're like me and have stints of OCD, you'll tap on the video to restore order to the universe.

Cloud Pricing

Now that we have some basic usage numbers to work with, let's talk about server pricing. Snapchat uses both Google Cloud and Amazon Web Services (AWS). For our purposes, we'll calculate using AWS pricing because it's cheaper. Note, Snapchat receives a sizable discount since they spend a ton of cash. So, their pricing may be different. We'll do the best we can.

Push Notifications

Push Notifications are pretty cheap. Snapchat sends out a push notification to every user which costs $0.50 per million. So, that's $0.50 x 100 = $50. Not bad at all!

Watching the Video

We've decided that about 50 million people will watch a holiday video. Each video is roughly one minute long which equates to a 15-25 MB file. This depends on the quality of the video but also the content. If the screen is black and doesn't change much, then the video will be smaller in size compared to a dynamic car chase. Let's assume a 20 MB video. In total, roughly 20 x 50,000,000 = 1,000,000,000 MB of data transferred. Or, about 1,000,000 GB of data! At AWS, that prices out at $0.02 per GB of data transferred. Or, roughly $20,000.

Extraneous Costs

The biggest cost is an indirect one. When you send a mass push notification, you'll experience a traffic spike immediately. A lot of users will open the app and flood your servers. This means, you could end up with millions of users hitting your servers in a short amount of time. So, you'll need the server capacity to handle enormous traffic spikes.

Ad Revenue

$20,000 may be chump change to Snapchat, but it's a significant sum of money and better be worth the cost. Let's break this down in terms of users. The cost per user of a holiday video is about $0.0002. Snapchat brings in about $0.0187 in revenue per user per day. Each Snapchat session lasts about 2 minutes and people spend 30 minutes on the app every day. This means, the holiday video accounts for about 1/15 of revenue for that day or $0.001247. This may not seem significant, but consider the scale: (0.001247 - 0.0002) x 100,000,000 = $104,700. Wow! Imagine if you're the Snapchat employee that gets to click the button to send a Christmas video. With one tiny exertion of force your finger made more money than you do.

If you're curious about the stats I used or the scale of Snapchat, check out the full Snapchat stats.