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How Snapchat Is Trying To Avoid YouTube's Ad Problems

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How Snapchat Is Trying To Avoid YouTube's Ad Problems
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Snap Inc (NYSE: SNAP) is looking to avoid the same mistakes YouTube made by placing advertisements over questionable content; the social media platform wants to give customers more control over ad placement.

Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s YouTube came under fire earlier in the year for lack of quality control of advertisement placement, which resulted in an advertisers boycott, when ads were placed on videos with hate speech, putting company’s in an uncomfortable position and threatening their brand reputation.

PepsiCo, Inc. (NYSE: PEP) , Wal-Mart Stores Inc (NYSE: WMT), Dish Network Corp (NASDAQ: DISH), Starbucks Corporation (NASDAQ: SBUX) and General Motors Company (NYSE: GM) were among the major companies that pulled advertising from YouTube after the boycott.

Snap is looking to steer clear of a potential YouTube advertising mishap by allowing brands that buy through a self-serve ad buying platform or advertising API, so they can choose to have their ads run only between regular users’ stories or only within the Stories and Shows produced by Snapchat and its media partners.

“Brands can also now opt to exclude their ads from appearing adjacent to certain content categories. Advertisers were previously unable to specify ad placement, so we view these new features as advertiser friendly and therefore incrementally positive for advertiser demand,” said Cantor Fitzgerald analyst Kip Paulson (see his track record here).

Not only will the new advertising options allow for better content targeting, it ensures that brands can avoid the backlash many faced on YouTube due to its inability to prevent ads appearing next to hateful and offensive content. This is essential for a platform like Snapchat, which is no stranger to questionable content.

Cantor Fitzgerald maintains an Overweight rating on Snap with a $15 price target.

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So What's The Difference Between YouTube And Facebook's New 'Watch'?

Latest Ratings for SNAP

DateFirmActionFromTo
Dec 2017Evercore ISI GroupInitiates Coverage OnUnderperform
Dec 2017BarclaysUpgradesEqual-WeightOverweight
Nov 2017JMP SecuritiesDowngradesMarket OutperformMarket Perform

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