Could BeReal be the first successful social media channel to grow without ad support?

It’ll be a challenge to keep this attention from marketers without robust advertising offerings. But for BeReal and other budding social media apps, the lack of ad opportunities may be by design and represent a new era of what it means to build and grow a new social media platform — without advertiser support.

“Historically, it seems like the mode of operations has been, get market share first and figure out monetization second,” said Brendan Gahan, partner and chief social officer at Mekanism. “We are at this time in social where the apps are trying to not be solely reliant upon ad revenue.”

Becoming less reliant on ad dollars

It’s a growing trend. Digital ad revenues on social media are shrinking thanks to rising ad prices and shoddy, inconsistent ad measurement. Which means the platforms are desperate to diversify revenue streams sooner rather than later, looking to leverage subscriptions or premium content to maintain momentum.

It’s a pivot from routes we’ve seen taken before — like Clubhouse, the audio-based app that peaked during the pandemic, but introduced advertising too late to continue as a competitor in the space.

Or, alternatively, TikTok — which could’ve plateaued when marketers found their ad offerings lacking but worked to bolster what they could offer, unveiling a slew of new performance marketing tools like shopping ads, automation and more at its TikTok World global product summit.

This new advertising life cycle for a social media platform is at least partly driven by trends elsewhere among social channels.

Social media marketers’ go-to platform, Meta, has been taking quarterly hits. Meanwhile, YouTube saw its first drop in ad revenue since 2019, per public reports. Snap, which has been pushing to “innovate its way out of trouble” for some time now is seeing the slowest rate of growth since the company went public five years ago. Then there’s Twitter, which has done itself in with Elon Musk’s acquisition of the platform, shaking advertisers and scaring off ad dollars.

Now, these platforms are looking to reverse course by becoming less reliant on ads by boosting programs to work with creators and by developing subscription-based options (i.e. Twitter Blue, Snap+ and live shopping on TikTok and Instagram).

It’s in this environment that BeReal is trying to compete — one that is encouraging diversification beyond advertising to shield itself from the pressures of an ad-funded model.

Up until now, BeReal’s strategy has been similar to other social media platforms just starting out: Raise significant investor dollars, scale up the user base, “and then a few years from now, flip the switch and hopefully make money,” as Gahan surmised.

In investment, at least, BeReal is following the growth model. Per reports, BeReal raised $30 million in its Series A funding last year, doubling that to $60 million in its Series B round earlier this year. That last round of funding is expected to quadruple BeReal’s valuation to over $600 million, per Business Insider, suggesting that the app is still a ways away from monetizing.

“What they’re doing is going for the market share, growth, exposure, and an ad-free space will always break faster than a place that’s showing you ads,” said Alex Payne, CEO and founder of influencer marketing agency Room Unlocked. “When they get to the mass reach user base they are looking for, is when they’ll start to seep it in.”

So, who’s using BeReal?

BeReal has been downloaded more than 40 million times since December 2019, according to mobile app analytics firm Apptopia. Much of that growth was from this year, with the U.S. accounting for nearly 40% of new users. In comparison, TikTok was downloaded 656 million times last year, per the analytics firm. And BeReal has grown so popular that both TikTok and Instagram have released copycat features.

Naturally, marketers’ interests were piqued, especially as the industry is desperately looking to get in early on the next generation of social media. However, this is easier said than done, considering BeReal’s anti-advertising policy listed within its terms of use.

Seemingly, BeReal’s interests lie elsewhere, given the platform is currently hiring for engineers and developers. Back in September, TechCrunch speculated that the app wanted to monetize influencer culture, and was considering paid features in lieu of ads. BeReal, however, has been tight-lipped about its monetization plans. When asked for a comment, a BeReal spokesperson said the company is “heads down, focused on the product and the mission.”

So while brands have experimented with what it looks like to be on BeReal, they’ve kept their ad dollars on established social channels. “TikTok, Instagram, Facebook is still part of the advertising mix and the content mix because it’s so invasive in our lives. Even though people are always constantly quitting it, they’re still on it,” said Tamara Littleton, CEO of social media agency The Social Element.

Diversifying early on

BeReal’s strategy is notably a different approach than those of the more legacy social media platforms — which have favored ad-funded models to reach users who were encouraged to spend endless amounts of time scrolling to be fed ads.

But the fact is, BeReal’s very essence isn’t to keep users on its feed for long periods. So the question still remains: How viable is it to create any sort of monetization on the BeReal platform — whether ads, subscriptions or something else — where the app model works by sending users notifications at random times each day for them to post a photo viewed by their friends?

Unless users can build a vast network of friends — and quickly — it doesn’t seem (at least right now) as if the model lends itself to typical advertising or even subscription models that rely heavily on reach and discovery.

As Ed East, group CEO and founder of creative agency Billion Dollar Boy suspects, the app’s intentional limitations encourage a spontaneous creativity that feels fresh and exciting. And it’s that element which has resonated with Gen Z.

A social platform’s advertising strategy then often comes down to the relationship it wants with its users.

Similar to BeReal, Snap is a social media platform that was originally based less on discovery and time spent, and more based on intimate connections. Snap, however, has had a rocky relationship with advertisers thanks to its limited audience, making it a nice-to-have instead of a necessity for advertisers. (More on that here.) To keep a steady flow of dollars, Snap pivoted, rolling out a premium subscription tier, Snapchat Plus.

It puts BeReal’s own innovation challenges with both monetizing and keeping user attention in the spotlight, especially as other platforms have moved to release similar, copycat features.

Starting a social media platform right now is a “precarious position to be in,” as Gahan puts it. Any marketers who aren’t holding their dollars close to the chest in the face of economic downturn are moving away from social media advertising in response to rising CPMs, shoddy targeting and measurement thanks to Apple iOS 14.

Marketers need reliability and are moving social dollars to other social channels and streaming channels, with audiences that have become more trackable with programmatic features.

“In the long run, we view BeReal as a feature and not a stand-alone product. Without an ad business, this is even more true,” said Jess Phillips, founder and CEO of influencer marketing agency The Social Standard. “If Netflix and Disney+ are launching ads, we can rest assured BeReal can’t avoid it forever either.”

However, as social media matures, ads should be just one part of any channel’s business plan instead of the whole plan, experts say. If not, platforms like BeReal could succumb to being nothing more than a flash in the pan. But brands should still test BeReal before it becomes “pay to play,” Evan Horowitz, CEO and co-founder of creative agency Movers and Shakers said in an email.

“When the platforms mature and become crowded, it becomes much harder for brands to reach consumers,” he said. He later added, “Were BeReal to break through and create more marketing opportunities, brand dollars would quickly follow.”