Show Me the Money: How to Monetize Meerkat

Five Strategies Other Social Apps Have Used to Earn Revenue and How Meerkat Can Use Them

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Everyone who has an eye on social media is watching Meerkat right now, and with good reason. The gambit plied by the streaming video app's creators -- get Twitter influencers on board and try to scale quickly -- is paying off. Launched on Feb. 27, Meerkat gained 28,000 users in its first week and reported the number of streams its users viewed doubled between March 5 and March 6 alone.

It even seems that Twitter unintentionally fueled a second wave of awareness of the app, with a move during SXSW to block Meerkat from its social graph -- Meerkat can no longer show new users which of their Twitter followers are using the video-sharing service. While there are certainly practical reasons to block Meerkat (it eliminates noise on the social network), it may also be a move to stymie Meerkat from competing with Twitter's just-launched live video-streaming service, Periscope.

Meerkat CEO Ben Rubin has suggested he's more interested right now in growing the app's user base than monetizing the operation. Well, he's succeeding in the first part, and in time, his team will need to focus on revenue. A handful of brands have already started sharing videos on Meerkat. Rubin and his team will inevitably find themselves in the same position every other popular social app has found itself in at one point: How can they turn brands' desire to engage with their audience into revenue, while preserving the basic integrity of the user experience?

Let's start by pointing out what makes Meerkat distinctive. Users can live-stream videos of any length from their mobile devices and announce on Twitter when they're streaming. Viewers watch and comment as the stream progresses. Users can then re-post their videos on other platforms, but within the Meerkat app itself, when the video over, it can't be replayed unless it's re-posted elsewhere.

As Meerkat's user base scales, the platform will create a lot of new videos. These videos are created and viewed in ways that will challenge brands to rethink their approach to video advertising and challenge Meerkat's team to find a monetization strategy that suits the user culture within the app. Here are a few strategies Meerkat might consider:

1. The Facebook model: post-roll ads

Pre-roll ads may be customary for YouTube and other free video publisher sites, but Facebook has suggested it sees itself differently and isn't looking to use pre-roll. So it needs some other means of offering brand sponsorships for videos created specifically for Facebook. The network's recent partnership with the National Football League -- showing short, original videos -- served post-roll ads from the series' sponsor, Verizon. For Meerkat, this model might mean using a media stream from any given source as a hook for post-roll brand association.

2. The Twitter model: extended audiences

Twitter allows brands to send out promoted tweets that reach targeted users who don't already follow them. Meerkat could do likewise, charging brands to amplify the reach of their live streams. Because Meerkat video creators can schedule their streams beforehand, this could mark the return of the "tune-in" storytelling model TV broadcasters once used to entice audiences. This is a two-way medium -- viewers comment about the videos, and those comments affect what the video creator puts into the stream. Rubin has said the real-time factor is part of why Meerkat was created for Twitter instead of Facebook. There will be value, then, in allowing brands and publishers to spread the word about their streams in advance.

3. The Snapchat model: reruns delivered to targeted users

The lack of a rerun function within the app is part of what makes Meerkat exciting for users. But as we saw when Snapchat started courting brands, some will insist that if they're making the investment, their ads should be guaranteed a longer life within the app. Snapchat first granted the sender (content creator), then the recipient (viewer) more control over the duration and number of times a piece of media could be viewed. If streams can be replayed or available for a certain period of time, as ads can in Snapchat, then Meerkat may be more desirable to brands.

4. The "everyone" model: data

Through scale and good use of video tagging, Meerkat could become a rich reservoir of interest-level data, primed for refined audience targeting. Through category and subject tags attached to streams, it's easy to determine user interest. If Meerkat reaches viable scale -- and it's not hard to imagine -- it would be able to layer this audience data into sales of the formats we've already discussed, in order to make targeting those formats more granular, or to sell interest-level data to third-party data providers.

5. The Tinder model: go freemium

The first step for a company like Meerkat is to entice users to download the app and to use it as often as possible. That's where Meerkat is right now. But as with a lot of popular apps, once users incorporate it into their day-to-day lives, they'll start demanding greater functionality. As Meerkat scales, it will have to listen to what else users wish they could do with the app. It could then keep offering the basic app, with all its trademark core functions, for free, and then charge users for added premium features.

Meerkat is off and running as a new app. But someday it will need to earn revenue to survive. Other social apps have made the leap, with varying degrees of success. Meerkat has to look to its forebears for inspiration in developing a revenue model that works for its user base, and which provides the targeting and brand safety its advertisers will demand.

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