Snap, the company that owns photo-sharing app Snapchat—beloved by millennials and intensely confusing to everyone else—is planning to bill its advertising revenue in the UK.
The London-based office will process revenue from ad sales to British customers and some other countries outside of the US that don’t have local Snap sales teams.
However, the company was keen to stress that its international headquarters remains in Venice, Los Angeles.
California-based Snap Inc, which filed for an IPO in late 2016, carrying a potential valuation as high as $25 billion (£20.5 billion), said London was “a great place to build a global business,” due to the “UK’s strong creative industries.” The decision to bill ad sales in Britain is unusual for a tech firm of Snap’s size; many Silicon Valley players either establish European HQs in Luxembourg (Amazon) or Ireland (Apple, Facebook) due to favourable tax rates.
It said: “We want to pay taxes in the countries where we sell advertising, and this is an important step in building the infrastructure to achieve that goal.”
Snap Group Limited’s boss Claire Valoti said: “We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we’ve already begun to hire talent.”
Snapchat currently has 150 million daily active worldwide users, and 50 million in Europe—a figure that is understood to edge past Twitter, yet is dwarfed by Facebook’s colossal userbase of 1.18 billion. Nonetheless, Snap commands the attention of the coveted 17-34 age bracket, which is highly lucrative to advertisers.
The app makes its money either through serving video ads lasting up to 10 seconds, or visual overlays that can be added to a picture a user sends, or via specially commissioned lenses that change people’s faces into dogs and suchlike. Business is booming, apparently: ad research outfit eMarketer estimated in September that Snapchat’s ad revenue this year could reach $935 million (£769 million), up from around $367 million (£302 million) in 2016.
The London office, based in Soho, currently has around 75 staff on its books—up from just six employees at the start of 2016. A second site is scheduled to open next door, and the firm has begun to hire a small team of engineers alongside the operations staff who will be needed to process the additional work. A spokesperson described the decision as “commonsense,” insisting that “it aligns our corporate structure with our business.“
It would be over-egging it somewhat, however, to say that Snap Inc is defying any dreaded Brexit effect. London’s adland is the perfect home for such a brand, especially given that so many Brits apparently use Snapchat on a daily basis.
This story was updated after publication to clarify that Snap’s international headquarters is in Venice.
Listing image by Sam Machkovech