Should Snapchat get some of your Ad Spend?

Out of no-where Snapchat has become a bit of a phenomenon. Riding (indeed, driving) the ‘let me take a selfie’ generation, it now has more users than Twitter, Pinterest or LinkedIn

Out of no-where Snapchat has become a bit of a phenomenon. Riding (indeed, driving) the ‘let me take a selfie’ generation, it now has more users than Twitter, Pinterest or LinkedIn [Source: CMO by Adobe].

However Snapchat, like so many start-ups of this age, has focused on first building its audience and is now retrospectively trying to monetise the app.

Of course, with over 150 million daily active users [Source: Adweek], it is not short of eyeballs to serve ads to, but it does face a challenge making the ads targeted and integrated for the consumer, and making them affordable for the advertiser.

Until relatively recently Snapchat offered an all-or-nothing approach – brands could spend hundreds of thousands of dollars/pounds on a sponsored “Story” or “Lense” and reach tens of millions of people, or they could do nothing. There is no doubting the potential reach for big spenders – for example, the Taco Bell sponsored Lense achieved over 224 million views in 24 hours [Source: Snapchat] – but Snapchat has failed to provide smaller businesses with similar, targeted opportunities.

This is a problem for Snapchat.

Indeed, take a moment to consider the success of Facebook and Google’s ad engines. With these tools a small business owner with a tiny budget can choose to reach people in a very particular area and achieve particular goals. Yet, a huge company can also do this. It is entirely scalable and, to put it crudely, Google and Facebook will accept money, whatever the size of the business!

SNAPCHAT’S NEW API

Recognising this challenge, in June 2016 Snapchat released an API for serving ads. This means that you should soon be able to buy ads on the service in much the same way that you do with Facebook or Google. Having said this, Snapchat’s video format is predominantly vertically aligned and so the content posted will have to be unique to the platform. This in itself may make it unaffordable for businesses with smaller marketing budgets. However, the option should be there to buy in at a lower cost.

In fairness to Snapchat, it has been moving towards this kind of low cost bulk advertising for a while. In February 2016 they introduced a portal for designing and buying Geofilters. These allow overlays at certain locations for a predetermined period of time. Whether it’s adding a bit of social buzz to a student house party, or promoting restaurants, it means that anyone can pay to have a filter appear on Snapchat. We think this is great, and it will only get better with the new API.

TARGETING

Facebook and Google do targeting very well; they know and understand who their users are. This makes them very attractive to advertisers. Snapchat, on the other hand, lacks this level of detail. Furthermore its founder, Evan Spiegel is famously quoted as saying that he does not like “creepy” ads [Source:WSJ]. Snapchat is, therefore, starting from a difficult position.

Having said this, recently (September 2016) Snapchat has announced that advertisers can anonymously match existing email lists with their own database [Source: WSJ]. This means that an online retailer (for example) could serve one of a number of video ads to a consumer based on their purchasing history.

This is certainly a clever workaround for Snapchat and it balances the need for target with the desire to avoid “creepy” ads. It will be interesting to see how it develops.

The new “Discover” section of the app can be used to further build a profile of its users. For example, a user who follows a brand or publisher can be categorised and later targeted for certain products. This is similar to what Facebook does; you can see your own ad profile here.

INTEGRATION

Earlier this year Snapchat changed how users interact with Stories. Originally a user would tap into a Story, watch it, then it would close. Now you tap into a Story and it auto-plays through all your most recent updates.

Although we might argue that this reduces the near perfect engagement rate on the app (we used to choose exactly what to see, now it is forced on us), it makes a lot of sense for integrating ads. In much the same way YouTube shows pre-roll video ads on its videos, it would be very surprising if Snapchat did not serve ads between different stories.

However, there may well be a backlash against this if it is deemed too invasive.

SO SHOULD SNAPCHAT GET SOME OF YOUR MARKETING BUDGET?

Snapchat content still feels totally ephemeral. Unlike Instagram and Facebook content, which has become very structured, filtered, and with a permanent feel to it, Snapchat is live, fun and a bit rough around the edges.

In fact, it’s so good that Instagram has made its own version of Snapchat Stories. They have called it Stories (!) and it’s almost a carbon copy. It will be interesting to see whether it makes a dent in Snapchat’s popularity, but I suspect it will not be as much as expected. There is an old adage that imitation is the greatest form of flattery, and I think Snapchat should take heart from the fact that Instagram is challenging them.

From a marketer’s point of view, as we have briefly discussed, Snapchat’s ad offering has historically been very binary – it’s either a huge, expensive campaign, or it’s nothing at all. However, we suspect that in the near future this is going to change significantly. It’s already possible to buy a Geofilter, which provides a great opportunity for bricks and mortar stores or experiential campaigns in general to engage consumers with their product or idea. The new API should result in better ad purchasing options for a larger number of advertisers. When these come out, I think it would definitely be worth spending some money on the system.

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