Snapchat Redesigns App to Shift Attention to Media Channels

The channels, known as Discover, are like mini mobile magazines on Snapchat run by media partners, including BuzzFeed and Time's People magazine. The startup slots ads between the stories people can swipe through. But Discover isn't the most popular part of the app. While 150 million people visit Snapchat daily, a Discover channel may only get 1 million views a day, people familiar with the matter have said.

Snapchat is trying to fix that by interspersing Discover channels with the app's Live Stories, which often draw tens of millions of viewers for popular events. And instead of just displaying a media company's logo, Discover channels will have a cover page of sorts that previews a story inside, according to a spokeswoman.

Snapchat and media partners split revenue from the ads on their Discover channels. The company runs ads on Live Stories too, but not on stories created by individual users.

The company was valued at $18 billion after its most recent fundraising, raising expectations that it can one day turn a fast-growing audience into big revenue and profits. However, it has work to do to convince advertisers to spend heavily on its service. Snapchat offers marketers a young, mobile-savvy audience without giving much data, while services like Facebook tell advertisers what people like and what they may want to buy.

While Snapchat builds a broader case for a return on investment from its ads, the fastest way it can grow advertising revenue is to increase the number of people seeing the marketing spots.

© 2016 Bloomberg L.P.