If you have really big ambitions, you can create a new social network, targeting young people! After all, old social networks are for old people 😉 And here is a very interesting example of a new social network that is built around purchases. As a result, you can start making money right from the start, without waiting for everyone to start using it.
The essence of the project
Claim is a new social network launched under the motto “share bonuses with friends.” And the participants of this social network receive bonuses for buying something through the Claim app.
By default, the purchases of each participant are visible to all his friends (unless he has decided to hide them). This way, you can see what your friends are actually using, and discover something new and interesting for yourself – products, brands, stores, and establishments.
Each purchase through the Claim app brings the user cashback and bonuses. A bonus is a free cup of coffee, a free cake, a free participation in a master class, or a discount on a purchase at a specific store or product from a specific brand.
The trick of Claim is that bonuses can not only be used by yourself, but also given to friends. And you can also exchange them, giving your bonus in exchange for someone else’s – for example, to try a free cake in a new restaurant for yourself, but in which your friend has already been and received such a bonus.
The issuance of bonuses that Claim participants can transfer to friends as a gift or in exchange is the main mechanic of the application, through which businesses acquire new customers.
In addition, businesses can once a week throw a certain amount of bonuses into the social network that social network participants can take for free. These bonuses can also be used by yourself, given away, or exchanged.
Businesses only pay when someone uses the bonuses they issued. It doesn’t matter if the same person uses them or their friend who received the bonus as a gift or in exchange.
It is possible that businesses also pay the social network for the bonuses thrown there, or there are some other rules and restrictions – for example, a business can throw in no more of its bonuses than were used the previous week. Otherwise, throwing unlimited amounts of bonuses into the social network will reduce their value to zero.
The target audience of businesses is offline and online restaurants, cafes, and stores.
Different businesses have already started working with the startup – from large brands like PepsiCo to small local restaurants and coffee shops.
The target audience of Claim social network participants is Generation Z. The startup decided to introduce this generation to the example of Facebook with college and university students. He started with colleges and universities in Boston. A more global launch is scheduled for spring next year.
The startup claims that in those universities and colleges where it has entered, their app is already used by 50% of all students. The startup says that there are currently 10,000 participants in their social network.
The application was launched in January of this year. Since then, more than $1 million worth of bonuses have been “redeemed” in Claim. The return on advertising costs through bonuses issued by businesses was 4.8x, that is, businesses earned almost 5 times more than they gave away for free. Each bonus throw leads to the fact that half of them are converted into a purchase or a visit to an establishment.
Claim has raised $4 million in investment and has disclosed that it received $2 million in investment before launching the app.
Interesting things
The founders of Claim claim that the reason for the popularity of their social network is that the existing advertising mechanisms are “seriously broken.”
On the one hand, people want privacy, that is, they don’t want to be bombarded with advertising based on secretly observed online behavior – which websites they visit, what they are interested in, and so on.
On the other hand, they want to find something new and interesting. But how will they find it if no one will offer them anything new?
The Claim mechanism solves this conflict. No one is secretly spying on anything, each social network participant knows what information about his purchases is available to others. As a result, participants can discover something new and interesting through their friends – and not in the form of paid advertising, but in the form of information about what they actually buy.
It is believed that such behavior is especially characteristic of Generation Z – they want more truthfulness and authenticity than the older generation. This means that they are reluctant to bite on advertising in general and on paid posts by advertisers in social networks. Are you writing about something? Have you tried it yourself? Did you personally like it, or are you praising it because you were paid?
In this regard, by the way, the question immediately arises of how the “like/dislike” issue is resolved in Claim. After all, you can buy something through Claim, get a bonus – but you didn’t like it. Probably, this bonus can be hidden so that no one from your friends wants to exchange it. And it is also possible that your own purchases and bonuses in the news feed that appear to your friends can be “liked” and “disliked”.
Today’s Claim is in line with the same trend towards “honest advertising” that I wrote about in yesterday’s review.
Yesterday’s The Desire Company publishes “honest reviews” of products. Experts receive products for testing, and create video reviews only of products they like. Honesty is ensured by the fact that they do not know whether they will receive commissions from the sales of the product offered to them for testing or not. This startup has raised $19.4 million in investment.
Another startup Lava created a tool that allows online stores to offer discounts to customers in exchange for posts on social networks that they can write about the purchased product if they like it. This startup was founded this year and has raised only $725,000 in investment so far.
The Hummingbirds startup (my review) created a platform where offline businesses can find micro-influencers at their points of presence and offer them to try their products and services for free – so that they can write on their social networks if they like this product or service. They raised $4.4 million.
A similar mechanic of giving away free products is used by the Stack Influence startup (my review) – but it focuses on offline businesses, not online stores. It raised $1.27 million in investment.
The SnapAds startup also focused on offline businesses that can pay local customers for posting about their business. The money earned in this way can be spent on purchases from this business or from other local businesses connected to SnapAds. It raised $1.2 million in investment.
The specificity of all the startups mentioned today, including Claim, is that they “leave out” influencers with large audiences – through which the bulk of influencer marketing budgets are currently being pumped.
For offline local businesses, it makes no sense to use big influencers at all, since their audience is concentrated in the minimum vicinity of their offline presence. Why then pay for the reach of “extra” people?
Well, for everyone else, small influencers represent an underdeveloped huge advertising channel with a relatively low cost of advertising compared to celebrities with large audiences. Because there are a total of 63.3 million nano- and micro-influencers, and celebrities with an audience of 1 million or more are only 34.3 thousand.
But in order to work with small influencers, platforms-intermediaries are definitely needed, which will take on the hassle of finding them, communicating with them, and other operational work. For one advertiser, it will be too expensive.
Where to Run
The general direction of movement is the creation of platforms for “honest advertising”, through which people can earn money by recommending to others products and services that they themselves like.
The mechanisms for this can be different, and any of the startups mentioned today can be taken as an example for inspiration and copying.
The Claim model is the most risky of them, because it is aimed at creating a new social network. And a social network must either become mainstream and mass, or it will sooner or later die. For example, because the same mechanisms will be built into some of the existing social networks.
But risk and profitability are directly related to each other. Low risk means low profitability, high risk means the chance to get an incredible return on investment. Or nothing at all So only people with big ambitions who are willing to take big risks can take the Claim model for inspiration. But there are such people among you, right?
Moreover, the position of Facebook as a mainstream social network among young people is seriously undermined. In 2014–2015, 71% of teenagers used it, and in 2022, only 32%.
Against this background, social networks targeting young people began to appear and raise investments, which, like Claim, are trying to lure them through universities and colleges. I even wrote about a couple of such startups.
The feature of Fizz is that their platform allows universities and colleges to create their own social networks. Fizz raised 41.5 million dollars in investments, most of which it received after my review.
The feature of Saturn, which raised 44 million dollars in investments in the first round, is that they are building a social network for students to meet offline, based on the choice of their joint class schedules.
About the company
Claim
Website: claim.co
Last round: $4M, December 20, 2023
Total investments: $6M, rounds: 2