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Over the last two years, advertisers have questioned Snapchat’s ability to meet their expectations on two key requirements: targeting and measurement.
Investor Fidelity’s move to slash the estimated value of its stake in Snapchat by 25% “exacerbated” these concerns, according to Reuters.
Snapchat offers few in-depth analytics or granular methods to target specific groups of consumers with ads, compared to Facebook, Instagram, and Twitter (who have all been in the advertising game a lot longer than the 14 or so months Snapchat has been selling ads).
Snapchat CEO Evan Spiegel and its other executives have previously said publicly several times that the photo-sharing app is against “creepy” targeted advertising: “We care about not being creepy. That’s something that’s really important to us. … We think it’s weird when brands try to act like your pal” by tracking you around the internet, Spiegel said.
But there are signs Snapchat has recently begun to soften that stance. And the general feeling from the advertising community towards Snapchat appears to be moving from one of frustration to one of understanding.
Snapchat declined to comment for this story. But the company appears to be undergoing a speedy cultural change. Spiegel made his complaints about “creepy” targeted advertising not in the distance past – but at the Cannes ad festival in June of this year.
Snapchat is warming to targeting
At first, the big sell of Snapchat was reach: We have a huge (100 million monthly active users) highly-engaged audience of the often hard-to-reach 13 to 24-year-old age bracket – pay us big rates to get in front of them with cool original creative that’s native to our app. We’re primetime for millennials.
Snapchat was asking for large upfront commitments of $750,000 to do just that with its “Stories” ad format. But over time the rates came down to a more realistic pricing structure. Now Snapchat offers a range of ad formats including 2 cents-per-view video ads, Sponsored Geofilters, and Sponsored Lenses.
And as Snapchat has rolled out more formats, it has invested in more targeting options – some of which may come as a surprise to users of the app. Here are all the targeting options advertisers can choose from on Snapchat:
Gender– Snapchatters don’t actually provide the app with this detail, but it is inferred and validated via Millward Brown.Age– When users sign up for the app, Snapchat asks for their birthday. Right now Snapchat is allowing alcohol brands, for example, to opt only to target users who are 18+ or 21+ (depending on the legal drinking age in the user’s geography.) But it’s easy to see how this could be opened up to target a specific age group.Device– Advertisers can target against a mobile operating system or a device manufacturer.Location– This option can be as wide as a country, state, or city and as specific as a movie theater or a college campus. Advertisers can also target against a specific event its Live section is covering, like a festival or an NFL game.Context– Advertisers can target a specific publisher in Snapchat’s Discover section. Or they can opt for audience “bundles,” which are packages of Discover channels grouped by a theme such as “world news and culture,” which compiles CNN, Mashable, Vice, and National Geographic.
Colleen Leddy, head of communications strategy at advertising agency Droga5, told Business Insider she thinks one of the turning points for Snapchat from an advertising sales and targeting point of view was the launch of its Discover section back in January. Publishers on Discover work with Snapchat to sell ads on the section and revenue is split between them.
“With some of the new experiments like Discover, which offers advertising through the publishers and Snapchat, I think they got more learnings that way and learned from the publishers about what clients wanted – it helped them to sell in a different way,” Leddy said.
She added: “I think they realized over time it was really, really difficult from our point of view to sell the platform to our clients. We are in age where you can target so specifically with programmatic advertising, and in an age where you can get all the results. Snapchat was saying: ‘You can’t get any of these things.’ I think a lot of marketing budgets were held back [by agency staff] thinking: ‘How can I sell this in a responsible way?'”
Snapchat has been making some under-the-radar improvements to measurement too
The biggest criticism leveled at Snapchat from the advertiser community is that the app commands huge advertising rates yet it provides little evidence to marketers that they are getting a return on that investment.
But Snapchat has been quietly – and admittedly slowly – making improvements there.
Since day one of selling advertising back in October 2014, Snapchat offered advertisers metrics including views and reach, working with third-party measurement firm Millward Brown.
This summer, Snapchat partnered with Nielsen and now it offers marketers additional metrics including completion rate and brand resonance.
Sydney Williams, head of social media at GE, which last month launched its second Snapchat ad campaign, told Business Insider this time around, Snapchat offered far more “in-depth” information about the conversion rate (those who swiped past its Sponsored Filter and those who actually went on to try it out.) Its first filter was used 4.7 million times, which resulted in 63.5 million views.
There are still some niggles. For example, one director-level digital advertising agency executive told Business Insider he questioned the fact that Snapchat counts a “view” as soon as it appears on a user’s screen, even if they only look at it for less than a second (the industry standard for a video view is that 2 consecutive seconds are watched and that at least 50% of the video frame is on the screen.) Meanwhile, the depth of measurement is still nowhere near the likes of Google and Facebook, which work with third-parties to determine really useful analytics such as whether a person who saw an ad on their platforms went on to buy the item in a physical store.
While advertisers wait for Snapchat to catch up, there is another option.
Software startup Delmondo claims to be one of the only analytics companies that works with brands to offer Snapchat analytics for their ad campaigns and work with Snapchat influencers.
There’s no official API (application programming interface) for analytics developers to tap into, but Delmondo gets its clients and Snapchat influencers to request “Authed/Tokened” access from Snapchat to get insights about the success of their Snapchat Stories and ads. These marketers and influencers pay Snapchat to be supplied the data, which the Delmondo platform analyzes. The fact that this kind of transaction takes place demonstrates it is taking a more responsive approach to measurement.
Delmondo CEO Nick Cicero told Business Insider: “Snapchat has definitely has come a long way on improving their offerings for advertisers, and I am so excited to see what 2016 brings, I think it’s the year of monetization for Snapchat.”
Snapchat is becoming more proactive with advertising agencies
Back in July when we last polled marketers and agencies about their opinion of Snapchat, the general feeling was that the photo app’s sales team wasn’t big enough, or organized enough, to fulfill advertiser demand. One director-level agency exec told us the relationship felt “ad hoc,” while a director-level marketer at a major consumer brand told us Snapchat had only “gingerly” began talking to his company. One advertising agency managing director told us that advertising and content partners were sometimes chosen based on executives (including Spiegel’s) own personal taste for the brand – leaving it difficult at the early stages for other advertisers to break in.
Since then, Snapchat has been staffing up. It has just opened its first office in outside of the US – in the UK – for example, and made quick work of meeting advertising agencies in the region, including smaller agencies.
Droga5’s Leddy said: “We are getting more and more contact from Snapchat – more them reaching out to us and more transparency about numbers … when we do have meetings the conversations have shifted to [Snapchat saying]: ‘Tell us what you need’ if they don’t have a solution rather than saying ‘we don’t have that.’ Even the pure amount of sales people they have hired to service accounts has definitely changed, and it’s much more about offering a solution rather than us [chasing.]”
Frustrations do still remain. One ad tech executive who works with both publishers and agencies told us that the people he speaks to think Snapchat’s “preciousness” over its platform and users – and therefore the fear of annoying them with advertising – has been interpreted as “smugness” by some in the industry.
“Advertisers feel they have to be there. But what are the tangible outcomes?” He said, but added: “From a user perspective, Snapchat is ever-explosive and is even becoming cannibalistic to other social platforms. I’m sure Facebook are kicking themselves they didn’t offer $10 billion for it.” (Facebook tried to acquire the company back in 2013 for $3 billion.)
Snapchat still has a long, long way to go until marketers’ satisfaction with its advertising offering reaches parity with other social networks. It took Facebook years to get past Forrester’s infamous “Facebook is failing marketers” study, in 2013. Now marketers say its ads outperform those on other social sites.
There will almost certainly be more hurdles on the way, but Snapchat is starting to act a lot more like the social networks it is so-often compared to – with some added idiosyncrasies. And that can only serve to command more spend from the advertisers who want to reach its lucrative audience.
Jason Stein, founder and CEO of social media agency Laundry Service, told Business Insider that it’s natural for a young, fast-growing company to lack engineering infrastructure and scaleable ad tech: “It’s more important at this point to invest resources into building a product that grows and retains user over the long-term.”
“I do think Snapchat has backed off its stance on ‘creepy’ advertising. Sponsored national filters, geo-filters and lenses are very much native ads, and represent great technological innovations by Snapchat. The units are in high demand from our clients and advertisers in general, and they perform very well,” he said. “It’s a pretty good look when users are having fun interacting with your brand to create original branded content that they then share with all of their friends. Welcome to 2016: selfie innovation is critical to the success of brands and tech platforms.”