Dive Brief:

• Snap yesterday announced Challenges, a new feature through which creators can earn money on its short-form video platform Spotlight, per a company blog post. A rollout is planned for next month for U.S. users ages 16 and older, with additional markets to come in the following months.
• The new feature will offer users a variety of challenges, such as best trick shot or funniest impression, with a cash prize for those with top-performing content. The top 50 eligible, relevant and highest viewed submissions for each challenge will be judged on creativity and originality, innovative use of Snap creative tools, unique POV and entertainment value.
• With the news, Snap is angling to use cash prizes to attract more creators to its Spotlight platform amid an increasingly competitive field of short-form video apps.

Dive Insight:

Snap's new feature on Spotlight aims to incentivize content creation and award users for engaging videos. Challenges, which often spur virality on rival app TikTok, will span a range of areas on Spotlight in order to appeal to as many users as possible. They will also incorporate other features on the Snapchat platform, including lenses, sounds and hashtag topics, which could draw further interest and help Snap distinguish Spotlight from its competitors.

Most appealing to creators will likely be the cash prizes, which will be offered as pools of money per challenge to be divided between the winners. The pools will mostly range between $1,000 and $25,000 and be split among an average of three to five users, with a minimum prize of $250 per Snapchatter. Compared to awarding a single prize to one winner, Snap's approach encourages lesser-known users to participate and may spur more opportunities for virality by reaching different echelons of followings.

As the competition heats up between short-form video platforms, cash incentives have become a popular method to attract creators. YouTube earlier this year launched a $100 million fund to dole out via its Shorts platform, and Facebook soon after announced a $1 billion fund to pay creators on its products, including Instagram Reels, through 2022. Snap previously had a $1 million-a-day fund for Spotlight, but shuttered it in May — a move that has pushed some creators away from the platform.

Another notable element of Spotlight's new feature is the control that Snap has over planning and releasing challenges. By doing so, the company could circumvent the appearance of copycat videos from other platforms and instead fuel the creation of original, Spotlight-specific content. Snap's control of the feature could also help it avoid controversial trends stemming from user-generated challenges, such as the recent "Devious Licks" challenge on TikTok.

The rollout of lighthearted and fun challenges could appeal specifically to Gen Z users — a core demographic in the short-form video war. YouTube recently launched one of its biggest marketing efforts to attract this cohort to Shorts. TikTok, which already has a strong hold on Gen Zers, is focusing on expanding to other generations through its social commerce capabilities.

Snap has recently made notable efforts to build out its platforms for marketers. The company last week launched a partnership with WPP to link its augmented reality capabilities with social commerce, allowing the agency's clients to collaborate on and access new Snapchat products. The app last month also rolled out Trends, a tool that aims to help marketers gauge consumer sentiment around certain topics and brands.