Market Overview

What's The Future Of Snapchat Advertising?

What's The Future Of Snapchat Advertising?

With Snap Inc (NYSE: SNAP) prices in the red — days after the social media platform’s splashy $24 billion IPO and subsequent cold reception from analysts — one looming question is how the app will monetize its 150 million daily users going forward.

Pricing for national integrated Snapchat ad videos runs about $10,000 a month, according to the digital marketing agency Wallaroo Media; between $450,000 and $750,000 a day for sponsored lenses; and $50,000 a day for Snapchat “Discover” ads. The cost of sponsored geofilters is unknown, according to Wallaroo, but the agency estimates it at about one-fifth the cost of a sponsored lens.

Ads are Snapchat’s largest source of income, and the company’s revenue is expected to top $1 billion this year.

The question then arises: What directions might Snapchat go in to add new advertising streams to its disappearing photo-and-video platform? Let’s take a look.

Learning From Facebook

Snapchat is opening up its API and allowing advertisers to purchase spots directly through third parties, in a move that follows Facebook’s model of working with partners to build its advertising base, according to a January story in Ad Age.

Integrated Apps And Autofill Ads

The app has added the ability to “deep-link” users directly from a Snapchat ad to an app that they already have downloaded on their phone, according to Mashable.

Advertisers can also take advantage of information users have already given to Snapchat to autocomplete sign-up forms, such as their name, phone number and email address, Mashable said.

The development comes at the same time that Instagram is funneling advertising into its own Snapchat-esque stories.

Instagram added disappearing video stories as a feature in August 2016, putting Snapchat head to head with Instagram’s parent company, Facebook Inc (NASDAQ: FB).

The Challenge Of Being Taken Seriously

The extent of Snapchat’s growth as a public company could ultimately depend on whether advertisers continue to view the app as an experiment or as a dedicated portion of their ad buy budget, according to Bloomberg.

And while Snapchat has some key differences from its competitors, such as how users add friends and the discoverability of its accounts, its success will nevertheless be judged against other social media giants, one major Snapchat advertiser told Bloomberg.

“Their maturation is going to be really based on how well they can deliver against some of the same metrics as Facebook and YouTube are measured against,” Kenney Mitchell, Gatorade’s head of consumer engagement, told the wire service.

Related Link: Is Snap A 'Lottery-Like' Stock?

Related Link: Is Snap Wall Street's Most Unloved Stock?

Related Link: Just A Reminder: Instagram's Daily Active User Growth Is Outpacing Snapchat's DAU Growth


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