Snapchat: Social Media Giant
Snapchat is the messaging app that took the social media world by storm in 2011. In just six years, the app, which offers photo and message sharing capabilities, has grown its active users to over 158 million daily and represents 31.6% of the United States social networking share. And now, the platform’s newer vertical video ads are receiving critical exposure in between users’ stories and content from premium publishers, such as Cosmopolitan, CNN and The Wall Street Journal.
On the heels of such dramatic success, Snap Inc. (Snapchat’s parent company) is now preparing to launch its initial public offering (IPO), and Evan Spiegal, the company’s 26-year-old founder, has oriented the messaging app to level in the same class as Apple and Facebook in terms of share. In 2017, Snapchat is projected to generate $940 million in advertising revenue, and if given a valuation of $25 billion, Snapchat will be traded at 26.7 times its ad revenue.
The Wall Street Journal reported that Snapchat has been courting advertising giants, such as Omnicom Group Inc. and Publicis Groupe SA for commitments of $100 million to $200 million in the 2017 fiscal year – nearly doubling or tripling their ad spend from last year.
Since filing for its IPO in November 2016, Snap Inc. has taken the following measures in preparation for the highest valuation:
- Developed an API for automated buying and selling of ad inventory
- Secured upfront spending commitments from ad agencies of at least $200 million on Snapchat ads
- Improved API targeting capabilities for its three different ad units, such as developing a partnership with Oracle Data Cloud to enable targeting similar to Facebook or Google. The three add units are:
- Sponsored Lens
- Sponsored Geofilter
- Snap Ads, which can be bought as:
- Snap Ads + Attachments
- Snap Ads App Install
- Snap Ads Web View
- Snap Ads Long-Form Video
- Snap Ads Article
When Snapchat released its long-awaited API (application programming interface) in October 2016, this opened the gates to a much larger volume of advertisers. They enlisted a slew of advertising and creative partners in order to automate sales and increase transparency around pricing and ad features. Snapchat media buying takes performance of creative, targeting and bidding in determining which ads to deliver. And with their ever-developing API continuing to improve ad options and targeting advancements, Snapchat is poised to change the game on paid media and digital advertising in the coming year.
Advertising with Snapchat: Ad Units & Creative Tools
So, how do you actually use the Snapchat platform? What are the different types of ad units, how do they work, and who are they best for? Currently, there are three different ad units, but there are more than three pricing models and buying options, adding additional layers of complexity to the media buying process.
Sponsored Lenses are interactive filters that all Snapchat users can use to enhance their photo or video. Advertisers work closely with Snapchat to ensure the creative works interactively across operating systems.
Sponsored lenses were first introduced in the latter part of 2015. Since then, the number of Snaps featuring Lenses have jumped from 10 million to 30 million, making them the platform’s most popular advertising tool. Sponsored Lenses use triggered animation to activate the user experiences, and these users interact with this ad type for about 20 seconds.
Sponsored Lenses can be bought as a National Campaign and have versatile in-campaign features, including:
- Flexibility to change lens colors and textures or swap 2D static images during the campaign
- Ability to utilize a second trigger in succession of the original trigger (ex: raising eyebrows or tapping on the screen)
- Swap an additional lens during the course of the campaign
- Leverage two different lens types to accommodate two users in the frame
- Swap in a second lens during the campaign, for example, if you wanted to introduced another character
- Create two different lenses – one for the front and one for the rear-facing camera
*These features may be subject to additional cost.*
In May 2016, Taco Bell launched a Sponsored Lens
in celebration of Cinco de Mayo that turned
users’ heads into a giant taco shell— racking
224 million views in one day!
Sponsored lenses are best used for nationally-known brands to improve their image or launch new products. Since Sponsored Lenses capture a national audience, the ad’s tone must be in tune with the actual brand’s persona. Notable brands that have utilized sponsored lenses include Gatorade, Taco Bell, TurboTax and The Peanuts Movie.
The actual cost of Snapchat ad units are ambiguous, although Sponsored Lenses reportedly cost:
- $450,000 each per day Sunday through Thursday
- $500,000 for Fridays and Saturdays
- And more than $700,000 for holidays/special events (like the Super Bowl)
Lenses are the most challenging ad unit to execute because advertisers/agencies have to work in unison with Snapchat’s developers to create and code the lens — a process that can take months!
A geofilter is a sponsored photo or video filter that is active on every Snapchat user’s account, in a defined geographic location and time. The brand or agency is responsible for providing creative (web optimized PNG file) that must follow all of Snapchat’s community and brand guidelines.
Sponsored Geofilters reach 40% to 60% of daily Snapchatters in your specified region, and this ad type was historically LOCAL. You can buy Sponsored Geofilters as:
- National Campaign: Reach Snapchatters at scale to generate awareness for a product or event.
- Works best when aligned with events, holidays and pop culture trends
- Partition the campaign into multiple groups by: age, place, or time periods (at an additional cost)
- Shared Spaces Campaign: Offer Snapchatters in high-traffic social spaces a fun way to send your brand message to friends.
- Snapchatters in a space of your choice (airports, colleges, high schools, golf courses, etc.) can view and send your Sponsored Geofilter
- Chain Campaign: Offer Snapchatters at your retail locations a fun way to send your brand message to friends.
- For geographically diverse campaigns, creative rotation is included and encouraged
- Geolocation data must be supplied ten days prior to campaign launch
- Event Campaign: Associate your brand with a major event, and offer Snapchatters a way to send your message.
- Snapchatters at an event you choose can view and send your Sponsored Geofilters to friends or post to their Story (excluding events with Live Stories)
- For longer events (like festivals), creative rotation is included and encouraged
Bumble, a mobile dating app, reached students
with a Sponsored Geofilter on certain college campuses
in the United States to promote young singles to join the dating site.
Nationwide (versus local) Sponsored Geofilters are a new offering from Snapchat. The pricing modeling for Sponsored Geofilters is relatively ambiguous, but we estimate the cost to be around a fifth of the cost of Sponsored Lenses.
Meanwhile, Sponsored Local Geofilters are estimated to cost $5+ (higher for special events).
A Sponsored Geofilter can be used to drive local awareness. Historically, Sponsored Geofilters have been used for local brand recognition, company announcements or as a recruitment tool.
Snap Ads offer up to 10 seconds of vertical full-screen video advertisements, with an option to add interactive attachments (people can further engage with your brand while still in Snapchat’s platform) easily accessible by swiping up. These types of ads have up to 2X higher visual attention in comparison to other social platforms, and two thirds of Snap Ads play with audio on for added impressionable moments. In January 2017, Snapchat launched their deep-linking ad feature around the time that Instagram launched ads within Instagram Stories.
In February 2016, Netflix leveraged a
Snap Ad+ Long-Form Video to encourage users
to ‘swipe up’ to watch the trailer for its show “Love.”
Snap Ads can be bought as:
- Snap Ads: Snapchat proclaims these are the ‘best mobile video ad,” and declare that two thirds of all Snap Ads play with audio on.
- Snap Ads + Attachments: Users can ‘swipe up’ on video ads to see more content while remaining in-app. Users can ‘swipe up’ to continue engaging with the following.
- Snap Ads App Install: Users can install the advertiser’s app without leaving Snapchat. Snap Ads App Install works best with Google Play and Apple App Store. These can be measured by the number of installs or post-install activity, such as conversations or purchases).
- Snap Ads Web View: Users can instantly access websites without opening a browser. The designated website that users are redirected to is pre-loaded, granting immediate access once the users ‘swipes up.’ These can be measured by the average time spent on a site, and can generate an estimated 80% lift in on-site time.
- Snap Ads Long-Form Video: If 10 seconds isn’t enough time to communicate your brand’s message, Snap Ads Long-Form Video allow users to swipe up and engage with content up to 10 minutes in length. This can be measured by the average time a video is viewed.
- Snap Ads Article: Snap Ads Article create engaging multimedia stories to mimic the format of Snapchat’s Discover (where users can access content to major publishers on their Snapchat home feed). This format allows advertisers to use a variety of media types, including text, in-line autoplay videos, animated GIFs and images/galleries. These can be measured by the average percent of article that is viewed.
Snap Ads with Attachments are reported to receive 5X the ‘swipe up’ rate versus the average CTR of other social platforms, but they are estimated to cost $10,000 per month.
The Future of Snapchat’s API
So what’s next? Having a handle on the relevance of Snapchat’s different ad units is a crucial first step, but knowing how to build Snapchat into your long-term marketing strategy is crucial. With the launch of Snapchat’s IPO in 2017, the future of the platform— as well as their advertising partners and third party vendors— is going to shift in huge and perhaps unprecedented ways.
Snapchat inked strategic deals with third party vendors that are categorized into four different buckets: Ads API Partners, Audience Match API Partners, Creative API Partners and Creative Partners (newest category added).
In a push to streamline the Snapchat Ads process, Snapchat also announced that Snapchat advertising buyers/marketers can license Ad Partners’ technology and manage these executions in-house. Before this luxury was afforded to marketers, this process operated much like a traditional insertion order does, requiring the Snapchat Ads Partner to manage and execute the buy.
Snapchat’s API opens the barriers to advertisers who wouldn’t normally advertise on the platform or were reluctant due to the app’s prior limitations.
Snapchat’s API: Benefits of Advertising on Snapchat
- Snapchat ads are about reducing ad friction, which is why they don’t use pre-roll and why its ads ARE skippable.
- Snapchat ads take advantage of sound, and users expect sound when interacting with some of Snapchat’s ads, filters and other features.
- Snapchat ads are actionable since they drive brand awareness. Full-screen Snap Ads and Sponsored Lenses (if you have the budget) have the most potential for influencing conversions.
Snapchat’s API: KPI Dashboard and Reporting
Advertisers can assess the performance of their campaigns through a web-based dashboard. “There has been a pent-up demand, specifically from trading desks and media agencies,” said James Tedford, CEO of Brand Networks (a Snapchat Ads API Partner). “They want to have more hands-on experience to really understand and do optimizations on their own.”
The dashboard reveals important key performance indicators (KPIs) such as:
- Number of views
- Campaign Spend
- How long videos are watched
- Other Real-time reporting (such as swipes or impressions)
Direct and immediate access to this kind of reporting is important because technology partners that advertise on other social platforms (Facebook, Instagram, Pinterest, Twitter and LinkedIn) can compare how Snapchat performs in the mix, and adjust media plans accordingly. With Snapchat’s API, advertisers have more access and control over analysis and reporting.
Adoption of Programmatic and Improved Targeting
The Snapchat advertising platform has adopted programmatic tendencies, which will ultimately create more scalable opportunities for advertisers to place their ads in between their target audience’s stories. Advertisers can even A/B test multiple ads simultaneously and optimize campaigns in real time, a similar concept that is commonplace on digital platforms like Facebook and YouTube.
Snapchat has announced the following targeting options accessible through its API:
- Email Matching: Brands can use their own customer database lists to find people when they visit Snapchat
- Interest-Based Targeting (Snapchat Lifestyle Categories and Lookalikes): Construct ‘lookalike’ models to find similar consumers for ad campaigns
- Custom solutions such as vertical-specific workflows, weather targeting, day-parting and syncing with TV
- Targeting by age, gender, location, device/operating system and carrier
- Snap Audience Match: Proprietary technology that brands can use in order to target users by anonymously integrating first party data and mobile device IDs to be overlaid with Snapchat’s user data
- [Snapchat has hinted that this will be available] Sequential Messaging: Users are retargeted and served with new ads after they’ve engaged with an earlier one
In the vein of its competitors – Google, Facebook and Twitter – Snapchat announced a deal with Oracle Data Cloud early 2017 to allow third party data in ad targeting. Snapchat previously denounced third party targeting as “creepy,” but the company is now embracing the granular targeting opportunities of offline purchasing data. Tapping into Oracle Data Cloud’s aggregated data on 110 million households, $2 trillion in consumer spending and 1,500 brands, Snapchat will be able to determine if offline activity or purchases are influenced by the ads on its platform, which will translate into more advertising dollars.
Digital privacy advocates, such as Electronic Frontier Foundation, have expressed apprehension over using offline data to target consumers, but this practice isn’t anything new. “Welcome to advertising in 2017,” said Staci Weber, Katana’s Media Supervisor. “It’s inevitable that Snapchat would take advantage of this information, regardless of their previous promise ‘not to be creepy.’ To remain competitive in the digital space and attract advertisers, all companies are going to need to find the balance between satisfying advertiser needs with consumer wants. At the end of the day, consumers need to understand that these ads are what allows the content to be free.”
Snapchat is currently the only platform leveraging Oracle’s offline data information, although other tech giants, such as Pinterest and YouTube, have established related partnerships. Facebook utilizes both online and offline data to improve ad targeting, even interacting with users to personalize which ads they are served. “To me, the only issue is that Snapchat users were led to believe that Snapchat was taking a more user privacy-focused stand on advertising and now they are backing out of that in an effort to increase their value,” said Corey Zalewski, a Media Manager at Katana. “Introducing third party targeting is nothing new in the digital ad space. However, since people will see ads no matter what, they might as well be more relevant.”
Lastly, it’s important to note that just because the majority of Snapchat’s monthly users are in the 18 to 24 age range (37% to be exact), this doesn’t mean that brands skewed towards younger or older audiences shouldn’t advertising on Snapchat. The intimacy of Snapchat’s platform between a brand and user fosters an advertiser’s ability to target individuals who are actually engaging the ads, versus just targeting millennials or Boomers as a demographic.
Over time, you can interpret data points and strategize how brands might retarget individuals who engage with your ads.
What does third party data targeting mean for advertisers?
Snapchat is migrating to compete at the same level as other social media giants, meaning that advertisers can now carry over the same strategies from other channels and test third party data targeting in Snapchat’s platform to create a cohesive display strategy.
What should advertisers and brands look out for when it comes to targeting?
- Don’t over-serve ads and continuously assess ad quality. You want your targeting to be relevant, but you run the risk of turning customers off if you are in front of them too much. Monitor ad performance very closely, and adjust as often as you need to.
- Don’t rely ONLY on third party data and offline purchasing data for segmented audience targeting. There is so much data and insights available around what stores consumers are visiting or making purchases at, but consumer behavior can be inconsistent or erratic, thus sometimes it’s not the best indicator for audience targeting.
When does it make sense to use third party data targeting on social media?
- Geolocation targeting. You can target a consumer when they are physically in a store— either to influence a purchase, or to boost brand awareness. Be sure you know your audience and understand their behavior if you plan to use this strategy.
- Test demographic data carefully. Laura Wusthoff, Associate Media Director at Katana, recommends, “This makes sense anytime the advertising is connected to a sales goal. Not only can you target a more precise audience using historical sales data but you can assess whether your advertising efforts are leading to in-store sales. This type of information is quickly becoming more prevalent, and I expect this will soon be a standard in connecting online and offline efforts.” Ultimately, you want to reach consumers who ‘ACT like’ your audience— as opposed to consumers who ‘look like’ your audience. Test different demographic data next to each other to build an accurate aggregate of user behavior.
How do you implement third party data targeting on social media?
- Layer. If applicable, you can layer contextual or additional targeting segments to your third party data. In Facebook, you can overlay age (first party data directly from Facebook) with data from third party providers. At Katana, we always overlay additional targeting, like household income, based on the campaign goals and what our clients are willing to test.
- Test. When testing data segments, create several groups and test each with their own separate budgets to make sure each group gets their fair share of budget. From there, analyze and delve into the third party data audience interactions. This will giving you insight into layers, segments or optimization levers that are (or are not) performing well.
- Segment. Analyze and interpret your split test results! From here, you can isolate high performing segments to avoid having these segments share other budgets. You can either silo them— they’ll allocate their own budget and maximize performance— or you can completely remove low-performing segments altogether.
- Budget. Be sure you consider the pricing model of third party data providers, since some vendors offer data based on a percentage model (might be best for lesser budgets since the percent is smaller to use that data) versus a flat rate model. “At Katana, we believe in a constant test of data on actionable results,” Wusthoff said. “Data-layered audiences should be tested against standard audiences to assess for cost efficient lift in engagement, and in-store results should be added to online engagement results to get a deeper understanding of advertising efforts on the consumer.”
What is the future of Snapchat?
Megan Marks, Social Media Strategist at Resolution Media, told Katana that Snapchat is slowly being integrated into more complex clients and adopted by less regulated/adventurous ones.
She continued to point out that the biggest hurdle Snapchat will have to overcome in the near future is integration issues with key tracking partners, like DoubleClick and Atlas, in addition to expanding targeting to include other major giants, such as LiveRamp/Acxiom. “Without tracking integrations, consumer leads can’t be attributed to the social partner and the lack of multiple ways to blindly transfer first data will likely eliminate several potential partners off the bat,” Marks continued.
eMarketer projected that Snapchat will gross $1 billion in advertising revenue by the end of 2017, making up nearly 2% of all social network revenue dollars in the United States. In another push to increase ad revenue, Snapchat is moving from a revenue-share model for premium publishers to an upfront license-fee model (where Snapchat retains 100% of ad revenue on its Discover platform), embracing a syndication model (how TV media inventory is purchased). This advancement, coupled with the development of an API and adoption of third party data targeting, has conveyed that Snapchat’s behavior has matured significantly— and is not a platform you can afford to set aside.
Interested in learning more about Snapchat? Listen to Katana’s February webinar, “The Ultimate Guide to Snapchat Advertising” to learn everything you need to know in order to leverage the industry’s most talked-about ad platform!