snapchat-is-the-next-major-ad-platform

From Mobile App to Mobile Ads

Snapchat, the popular mobile app that lets you send expiring images and videos, has come a long way in just 4 years. In its original version, the app was more private, only letting you send “snaps” (videos or images that last up to 10 seconds) to your friends. As the platform evolved, Stories were introduced, which let users view certain snaps for 24 hours. This quickly became the most used feature of the app.

Snapchat eventually introduced a feature called “Discover,” opening up the platform to major publishers like CNN, Buzzfeed, ESPN, and Vice. Discover Stories presented users with short-form content and articles that loaded almost instantly.

Just last week, Snapchat opened up the gates for third-party advertisers.

Snapchat Partners: The Long-awaited Advertising API

On June 13, Adweek finally revealed Snapchat’s advertising API (application programming interface). What exactly does this mean? In a strategic move against Google and Facebook, Snapchat Ads will be sold by third parties. This will be divided into two groups: Ads Partners and Creative Partners.

Ads Partners

Ads Partners are a group of ad tech developers will be responsible for developing ad software, including the “buying, optimizing, analyzing of campaigns.” These partners include 4C, Amobee, VaynerMedia, Brand Networks, SocialCode, TubeMogul, Adaptly and Unified.

Creative Partners

On the other side are the creative partners, the experts in developing vertical video content for Snapchat (also known as 3V, or Vertical Video Views). The partners include Big Spaceship, The 88, Alldayeveryday, Matte Finish, VaynerMedia, Virtue, Refinery29, BrandLab, Moment Studio, Stun Creative, The Mill, Studio Number One, MediaMonks, Unit9, Contented and Truffle Pig (Snapchat’s Agency in partnership with The Daily Mail and WPP).

Regardless of how the Snap Ads are designed or developed, Snapchat will still review and approve each ad load in order to protect users.

Ads Between Snaps

As Snapchat moulds its advertising platform, more ads will start to show up in the app. A few weeks ago, Snapchat rolled out “auto-advancing stories” that played story after story without having to lift a finger.

Now, Snapchat will occasionally insert an ad from one of its creative partners in between your stories. None of the ads will ever interrupt a story, and they won’t display each time you auto-advance. But still, when users now see a Snap Ad, they can swipe up to install an app, watch a video, or visit a website, depending on how the promoter wants it to work.

“We have to be thoughtful about the inventory, ad load and the ad experience,” says Peter Sellis, Snapchat’s head of monetization, “But we also know that we cannot build custom ad-tech solutions for every big type of advertiser, for every vertical. And so these [partners] really excel in those kinds of ways.”

3V, The Future Format of Ads

If television commercials worked best in the 90’s, and banner ads at the dawn of the internet, then Snapchat Ads could be the future of mobile ads. The app’s effectiveness as an ad platform is based on more than fancy geo-filters and eerie facial lenses, it can be boiled down to three factors: ad length, ad space, and skipability. Media Science Lab compared Snapchat to Facebook, Instagram, Youtube and traditional television (without DVR capabilities) on these three factors.

Compared to the others, Snapchat stood out with much shorter (10 seconds, other social networks had 30 second ads), full-screen, and skippable ads. The result? Snapchat commanded twice the visual attention of Facebook, 1.5x the visual attention of Instagram, and 1.3x the visual attention of YouTube.

A chart of how Snapchat generates the highest purchase intent

Source: Media Science Labs

Snapchat also generated the a higher emotional response than Facebook, Instagram, YouTube or Linear TV, based on electrodermal activity. Snapchat also had a +11% lift in purchase intent after viewing a Snap Ad, more than twice the other ad formats.

Snapchat Sponsored Lens - Gatorade Superbowl Campaign

Source: TechCrunch

Gatorade demonstrated the app’s reach with their latest Snapchat campaign during the Superbowl. Their sponsored lens allows users to take a selfie that gave them eye black while being dunked with a Gatorade container. Users spent an average of 30 seconds with the lens, and the snaps were viewed over 150 million times.

Who knew that shorter, skippable ads could lead to higher engagement?

Snapchat, by the Numbers

According to Snapchat, more than 100 million people use the app everyday, and each day it reaches 41% of all 18-34 year olds in the United States. These are tremendous figures for an app only in its fourth year.

Snapchat estimated a revenue of $50 million last year (and it only started making money in 2014), but projects a  revenue this year of $350 million, a sevenfold increase. Compare that to Facebook in its fourth year, where its growth was only 78%. The potential for growth is enormous.

Now what does this mean for brands and marketers? As we begin to see more third-party ads pop up in the app, we’ll start to measure whether Snapchat can live up to its promise of a billion dollar valuation. But based on what we know so far, the platform is just getting ready to shake up the advertising paradigm.