Brands Shouldn’t Get Too Excited About Snapchat Ads

Photo: Adweek

This weekend, Snapchat’s highly anticipated first ad ran on the messaging platform. A 20-second trailer for horror film Ouija, which hits theaters this week, appeared in Snapchat users’ “Recent Updates” section.

Snapchat has been one of the fastest growing social platforms of the past few years, now trailing only Facebook and Instagram in 18–34 smartphone penetration. But does a growing base of engaged users make the app an ideal platform for advertisers? Maybe.

There are many reasons to get excited about the future of Snapchat ads, but there also many reasons brands may want to temper their ambitions – at least for now. Let’s start with the potential opportunities of Snapchat as an ad platform:

• Premium “native” formats – Like most social networks before it, Snapchat’s ad offering runs “native” on the on the platform – that is, paid posts adopt the same format and placement as organic posts (the ads do feature a “Sponsored” tag). Furthermore, Snapchat’s native post formats – photos and videos – are the very type of content that advertisers are willing to pay big bucks for. By making video a key part of its ad offering, Snapchat is positioning itself to steal video ad dollars from major players like Facebook, Instagram and Youtube.
• Engagement – Unlike other most social networks, in which content is pushed into the newsfeed, Snapchat users are required to engage with the app in order to consume content. This level of engagement – user’s must physically touch and hold the update to view the photo or video – is an advertiser’s dream. While viewing an ad is optional, brands can be certain that users won’t simply glaze over their ads as they might on more passive consumption platforms.
• Demographics – Snapchat’s explosive growth among teens and millennials gives brands yet another platform to help them tap into an influential demographic. While no official demographic figures have been released, comScore estimates that almost 1/3 of U.S. 18–34 year olds use the messaging app, the majority of whom are female. But its astonishing growth is not contained to just the U.S. The app ranks in the top three of many of the world’s most developed consumer markets, including the U.K., Canada, France and Australia.
• Immediacy – Snapchat is best known as an ephemeral messaging platform – shared messages “self-destruct” after a designated period of time. This adds another layer of engagement to media consumptions, as users must pay attention to the message or they risk missing something for good. The ephemeral format is also ideal for marketers looking to induce impulse purchases. By setting a time limit on ads, marketers may force users to make gut decisions as to whether they will engage with, or potentially redeem an offer. While Snapchat has made no indication that direct response ads are imminent, the platform will need to find a way to drive users to a website if it wants brands on-board. When that time comes, Snapchat could be the ideal platform for marketers looking to offer flash deals and doorbusters.
• Mobile Location Data – Perhaps Snatchat’s greatest advantage over traditional online advertising platforms is the wealth of mobile location data is has. While Snapchat has limited personal data about its users (more on that later), the platform’s recent introduction of location-based filters reminds us that Snapchat knows (at least broadly) where its users are at any given time. Snapchat CEO Evan Spiegel remarked before the launch of the ad product that Snapchat would not be rolling out “creepy and targeted” ads. However, it may only be a matter of time before real-time, localized offers hit the platform. As Bloomerg’s Mark Milian and Re/code’s Peter Kafka remarked on Twitter Friday, many of Spiegel’s social predecessors have had a change of heart when it comes to targeted ads.

Photo: Mail Online

Now, let’s walk through some of the challenges potential advertisers might face on Snapchat:

• Limited Targeting – As previously mentioned, Snapchat collects limited personal data about its users (only their age, email address and phone contacts). New users are not required to disclose their name, gender or interests, common marketing segments available on other platforms. Furthermore, unlike Facebook and Twitter, which leverage valuable text and link metadata to infer the interests of individual users, Snapchat’s focus on visual media makes it difficult to determine what its user may like. These targeting limitations may be a tough sell to potential advertisers who are used to more-refined audience segmentation options on other platforms.
• Limited Analytics – With limited targeting, comes limited analytics for advertisers. Without much data on its users, Snapchat can offer few insights about the users who engage with a brand’s ads (namely, age and location). Additionally, there are only two actions a user can take on an ad – hold and watch – thus, limiting the insights and advertiser might glean from its ads to open rate and video completion rate. Many advertisers might decide this pales in comparison to the conversion-driven metrics provided by platforms that support more in-ad engagement.
• Impeding Product Features – If Snapchat hopes to woo advertisers, it will need to rethink many of its key features. While Snapchat’s “engage to consume” model has many benefits, the press and hold action requires one’s hand to remain firmly on the screen. If Snapchat decides to add more rich media units to the platform (which could fetch premium ad dollars), the loss of one hand may become a limited factor. Similarly, Snapchat currently does not let users know if a new update contains audio. Users whose phones are set to vibrate may find themselves missing the majority of an ad, while they fumble with their audio settings. Finally, on most other platforms, if a viewer wishes to replay an ad, it is easy to do. However because Snapchat is an ephemeral messaging app, the ads disappear almost immediately after the timer runs out. The result may mean several missed opportunities for advertisers who wish deliver quality impressions.
• Lack of Social Features – Like most messaging platforms, Snapchat is optimal for 1-to-1 sharing. Despite its successful transition into public broadcasts (via Snapchat Stories), the platform still lacks basic sharing features prominent on networks like Facebook, Twitter and Pinterest. This limitation greatly hinders the potential virality of effective ads. For that reason, potential advertisers may opt to allocate their media budgets to platforms that enable users to share their promoted posts, an action which effectively lowers the cost per click of a media campaign. Additionally, while Snapchat has ventured into public posting, the platform lacks a public “follow” feature. As a result, the content creator/publisher must actively add other users it wishes to see its updates. Adding a follow feature, would allow brands to dynamically grow their audience, while also lowering the barrier to entry for user to consumer another’s content.
• Discovery – Perhaps the biggest product weakness of Snapchat (both to paying or organic users) is the poor profile discoverability on the platform. Due to the set-up of the app, user’s must know a friend’s unique username, or the friend must be listed in your phone contact list, in order to add someone as a Snapchat buddy. This makes brands hoping to build a Snapchat following reliant on promotion on other social platforms as a means to encourage fans of the brand to add them on Snapchat. The inability to follow an account, after one sees an ad, directly impacts the number of organic “followers” a brand can pick up from a campaign. Social followers are not valueless. In fact, these the life time values of followers picked up from paid campaigns can often be the difference between an ROI-positive and an ROI-negative campaign.

As you can see, Snapchat has a ton of potential for marketers. However, it must first address many challenges (including several existing product features) to truly become a broadcast platform that advertisers flock to. This approach may require a bit of imagination, but it is far from impossible. If Snapchat can successfully navigate these waters, the company’s profits are sure to last much longer than its ads.