Snapchat struggles to increase ad revenue — here’s what they offer brands
Originally published at linkedin.com on November 8, 2017.
Snap CEO Evan Spiegel said the company would overhaul its Snapchat messaging app after it announced a $443 million loss this quarter. On top of that it added only 4.5 million users, missing Wall Street expectations. You can participate in the LinkedIn discussion here.
Given how analyst expectations on revenue and daily active user growth were not met, Spiegel says that the app will undergo a major redesign, reports Mashable. But what changes can we see Snapchat adapting to better ad revenue?
Below are ways in which companies can advertise on the platform:
Filters, Snap Ads, and Lenses are key components that provide Snapchat’s with ad revenue. In this article, we’ll take a look at past success stories and see where the platform might be headed in regards to paid advertising.
Filters: The Start of Branded Content on Snap
“Filters allow you to be where your product is bought, thought about, or consumed.”
According to Snapchat, +1 billion filters viewed every day on average. Filters are the staple feature to Snapchat; it’s one of the many key characteristics that helped distinguish the platform from its competitors early in its days.
Filters used to be solely curated by collaborative work from Snapchat and graphic designers, but the Venice company has made it easier for everyday users to create and implement their own filters. Filters allow you to select a location to fence in users able to utilize your filter. The filter will appear once users have taken a picture or video and then scroll through the filter options — where they can encounter geo-filters (filters specific to a certain location or business).
You can create your own Snapchat Geo-Filters here.
Snap Ads: Swipe Up!
Every company has to make money. Snap Ads began in Snapchat’s Discover section, in-between publishers’ articles. For now, you have probably seen them as you swipe from one friend’s story to the next, usually lasting 10 seconds.
Snap Ads are full screen video ads made for Snapchat. With one swipe, Snap Ads can drive visits to your website, views for your short film, installs for your app, and more. Snap ads can appear in between stories from friends, or even inside premium content like Our Story, Publisher Stories, and shows from brands you know and love.
As of now, the ads remain skippable, thus users that do not want to see the ads could easily tap away. For those interested, however, you can swipe up and be redirected to either the advertisers’ webpage or an article within Snapchat.
Snapcodes serve as user profile URLs within the platform. Simply scan the code with Snapchat’s camera and it will recognize the QR code and open a message. Try watching Snapchat’s Success Stories below by scanning the code!
When scanned, Snapchat will ask you if you wish to open the presentation. Press “Open” and you will be shown a presentation of past clients and their successes through their platform.
For more Snapchat success stories, you can click here.
Interactive Advertising: Gaming
One of the earliest brands to innovate with its marketing on Snapchat was Gatorade. The playable game was first encountered in the ESPN Snapchat Discover channel, prompting readers to swipe up to play the game. The game itself takes you alongside Serena Williams as you play through 22 levels, representing the 22 Grand Slam singles titles Williams has won in her career.
The game works simply by tapping on the screen to strike the tennis ball. However, it was the first playable ad made available on the app. Another successor came from Under Armour, where much like the popular game Temple Run, had Cam Newton as a protagonist running from a pack of wolves.
Dominating Vertical Content
Snapchat can most definitely be credited for popularizing vertical content. In a space of horizontal videos, Snapchat has been able to encourage their users from preferring the 9:16 ratio; where in platforms like YouTube users are pretty vocal about the content be horizontal.
Regardless, Snapchat has made vertical content their priority. Viewing preview of videos on Discover will sometimes be exclusively vertical, but upon swiping for the full video you will be prompted to a horizontal view of their content.
Vertical content has allowed Snapchat to champion the digital editorial content. Expanding from articles and polls, brands have also noted vertical contents’ potential and have created campaigns exclusively revolving around it. While vertical content would not work well in platforms like YouTube and Instagram (before its introduction of Stories), Snapchat did so seamlessly.
Colgate was one of the first brands to hack vertical content. For World Water Day, Colgate created an upside-down video to highlight the importance of turning off the faucet. Users would encounter upside-down text, thus would turn their phones to be able to read it.
Many ads within Snapchat are vastly vertical and it is quite a differentiating feature for the platform. While vertical videos are constantly hated in platforms like YouTube, it is the standard on Snapchat.
Lenses: Augmented and Virtual Reality
Lenses are an exciting way to increase awareness on a massive scale. Snapchatters just tap to jump into your world and express themselves, or discover something new. +1/3 daily audience plays with Lenses every day.
Lenses are Snapchat’s most exciting feature for advertisers. Lenses range from Augmented Reality to Virtual Reality. AR takes place when 3D-digital models are placed on the real world landscape — through your camera. Examples of these include (but are not limited to) changing Snapchatters’ heads to Taco Bell tacos, a virtual Gatorade cooler dropping on users’ video selfies, and let you sport L’Oreal’s latest lipstick.
In regards to Virtual Reality, Snapchat is still exploring its potential. Snapchat partnered with Netflix to debut their “Stranger Things World Lens.” The lens allows you to go into the Byers’ living room and spot references to the first season of the Netflix Original.
While it’s still in the early stages, Snapchat is betting hard on AR & VR, especially since Apple gave AR a big push with its iPhone X capabilities.
What do you think?
On Snapchat, context matters. That’s why your ads don’t appear in a feed; they appear in a message sent between friends or in stories from the close friends and storytellers you choose to watch. It’s a great place to tell any kind of story and get the results that matter most to you.
Snapchat finds itself in a troubled spot: no growth on revenue or users. We can only wait and see what new business models the creatives at Snap, Inc. will curate. Will it continue to be subtle, skippable ads in-between content, or do we see the platform leaning into 15 second unskippable content, much like YouTube.
Snapchat must figure something fast and create a sustainable ad model for brands while also not drowning their users in 10 second commercials to watch a six second picture, like Vine.
What do you think Snapchat should introduce? Do you have hopes for Snapchat in the following year? Comment below!
Got any thoughts to add? Tweet me @juliangumbo or comment below!
Julian Gamboa is a UC Berkeley graduate with a focus on marketing. Julian was selected as a LinkedIn Top Voice for Marketing and #Social Media (2017) and a Course Instructor of the marketing and digital publishing course Digital Marketing Today at the Haas School of Business. He is also the founder of Digiviewpoint, a millennial publishing account.
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