A fourth horse changes the race;
Snapchat revamps its platform for the future
By Brian Tapfar, GroupM Connect
Snapchat recently announced sweeping updates to its platform ranging from a new user interface to a new marketing API, along with some new ad units and measurement capabilities to continue its evolution. These changes represent a significant maturation for the relatively new app, and in the following paragraphs we explore them in more detail along with their ramifications for advertisers.
A BRIEF HISTORY OF SNAPCHAT
Snapchat launched five years ago, in 2011, and rapidly found popularity among teens and young adults, primarily due to the ephemeral nature of their shared photos. After some press identified Snapchat as nothing more than a tool for misbehaving youth, the app made a series of adjustments to legitimize and cement itself in the social media landscape as the social platform for visual musings. The core concept of ‘disappearing’ photos hasn’t changed, but users are now much more likely to share photos of silly faces with their friends than the risqué images that were more common early on. As a result, Snapchat reports that it has grown to 150 million daily active users, the vast majority of which come from the coveted 13-24 demographic. Snapchat’s scale is still quite small compared to giants like Facebook, Instagram, and Twitter, but growth trends are very positive. Marketers have certainly taken note, with brands such as Starbucks, McDonald’s, Taco Bell, Universal, and Nestlé all making Snapchat a part of their digital marketing strategies.
NEW LAYOUTS AND MARKETING OPPORTUNITIES
Snapchat’s update includes several elements designed to increase the breadth of user interaction, and also help marketers reach more consumers. These changes include a new layout for the main user interface (Discover tab), more variety in paid placements (User Story ads), and richer ad unit capabilities (expanded Snap Ads). In an effort to avoid harming the user experience, Snapchat has said it plans to be “conservative” about the number of paid impressions it serves each day, but has not announced an exact cap.
The vast majority of user time spent on Snapchat has focused on sending and viewing User Stories, an activity with limited opportunity for paid impression delivery. Snapchat’s new redesign has moved the Discover tab from a separate screen with small circular icons for each publisher to a prominent editorial placement above User Stories. By making Discover placements more prominent, Snapchat is hoping to provide marketers the opportunity to reach as many daily active users as possible. Snapchat had indicated anecdotally that both traffic and time spent have increased dramatically for Discover placements, though a lack of transparency on audience size makes it difficult to accurately estimate the scale of this opportunity. It is important that advertisers and GroupM agencies continue to be vigilant in negotiating costs for these placements, as publishers may attempt to use this growth to increase prices.
In a more drastic change, Snapchat is also to including Snap Ads in between User Stories. In other words, paid content is being served in between organic content, as opposed to just editorial content as before. These videos, as with all Snap Ads, have sound-on as their default setting. We expect audio to be a more important part of these ads than on other social platforms based on typical user behavior. This change is perhaps most likely to generate user backlash as User Stories are often regarded as more private spaces, however as with ad rollouts on other platforms (Instagram, for example) this will likely fade with time.
Finally, the Snapchat video ad unit itself is evolving. Users can now swipe up on Snapchat’s ads to reveal additional content and calls to action. Examples include app installs, long-form videos, or simple mobile-optimized website content (for example, recipes or advertorial). ‘Swipe-up rates’ are currently between 20% - 40%, significantly higher than standard CTR benchmarks, though this may be due in part to the novelty of a new ad unit.
These updates represent an exciting step forward for Snapchat to leverage its highly engaged, youthful audience in a way that is more productive for marketers. Ad units that used to be relatively dead-end videos can now include site visits, lead generation, or a deeper dive with branded content, much of which can be used to retarget and foster consumer relationships.
SNAPCHAT TAKES BIG STEP FORWARD WITH API LAUNCH
In the same release, Snapchat announced its API rollout, perhaps the biggest development for Snapchat marketing thus far. Joining the likes of Facebook/Instagram, Twitter, and Pinterest, the API allows Snapchat to partner with tech companies and creative firms to streamline marketing offerings and help develop more advanced capabilities. As Imran Khan, Snapchat’s Chief Strategy Officer, puts it, “Different marketers have different objectives, and we just want to make it easier for them to buy ads on the platform.”
Through the API Snapchat has altered its ways of working to allow for more ease of activation. Instead of having to go through a relatively small sales team at Snapchat and relying on them to traffic ads, share reporting, and make optimizations, marketers will now be able to buy ads through a number of partners. At launch (which is currently slated for 10/1), the API capabilities will be somewhat limited, focusing on Snap Ads running in User Stories only and targeting users based on gender, demo, and CRM matching. All ads will be bought through CPM bidding. These types of relative limitations are not unusual for API launches and we expect that the new API partnerships will help fast-track additional opportunities. Snapchat has been quiet about their roadmap, but based on the growth models of similar platforms, marketers can anticipate more robust targeting through 3rd party and on-platform integrations, objective-based bid flexibility, and marketer-facing reporting dashboards. Snapchat is also partnering with Oracle for ROI measurement capabilities and will be partnering with MOAT for delivery verification, another example of Snapchat swiftly closing the gaps between itself and the more established social players.
WHAT THIS MEANS FOR ADVERTISERS
As with all new products and features, testing and learning is needed. Numerous GroupM teams have already leveraged Snapchat’s highly engaged audience. Early best practices have started to be developed, most notably the need for ads to fit seamlessly with the organic and editorial content surrounding it, but Snapchat is still quite new. The API opens the door for more control over creative support and iteration which can place willing advertisers at the cutting edge of Snapchat best practices through strategic test and learns.
In order to fully take advantage of these new developments, advertisers should be prepared to invest further in custom creative elements for Snapchat, as ad units for the platform are highly specialized. The simplest ad units feature vertically oriented videos or vector files to overlay over Snaps, while the more complex ad unit, Lenses, requires moving imagery that users can use to enhance their own Snap videos. So while the media investment needed to test and learn has decreased, non-working costs may still be a barrier.
As many marketers continue to work for a better understanding of social video best practices and strategies, Snapchat represents something of an anomaly. Other social platforms like Facebook, Instagram, and Twitter deliver video without sound in a square or horizontal layout, but Snapchat insists upon vertical orientation and a sound-on default, claiming consumers prefer it. Since 2015, the number of videos shared on Snapchat has grown from 2B to over 10B, so clearly vertical videos aren’t preventing consumers from participating. This further emphasizes the need to marry creative to platform and audience insights. Moving forward, advertisers’ mastery of digital video will be incomplete without a well-defined strategy for short-form, vertical ‘Snap’ videos.