“When a product you didn't end up buying follows you around—that ends up feeling strange and maybe even winds up doing brand damage." -Evan Spiegel, CEO of Snapchat
If you’re over 25 years old, you may not know much about Snapchat, the vanishing photo-sharing app that recently celebrated its fourth birthday. Unlike other social media platforms, where photos and personal information may be stored indefinitely and sold off to third parties, a “snap” will disappear 10 seconds after another user has viewed it, thus encouraging a (possibly false) feeling of security and privacy for users. Although it still trails behind more established social media sites, such as Facebook or Twitter, Snapchat’s popularity has grown steadily as younger users navigate the digital realm from their phones, rather than their computers. According to Business Insider, Snapchat is estimated to have 100 million daily active users (a figure which could be closer to 200 million), with 400 million snaps sent per day.
Snapchat’s audience is also young, with 45% of its user base between the ages of 18 and 24, representing a key opportunity for advertisers to reach an elusive but valuable demographic. However, only 1% of advertisers are using Snapchat, far behind Facebook, Twitter and LinkedIn. This may be because of Snapchat’s concern with not alienating its young audience; Snapchat’s CEO, Evan Spiegel, has repeatedly stated his concern that he does not want advertising on the social media platform to be “creepy,” with banner ads and takeovers disrupting the user experience and potentially damaging brand perception. Needless to say, Snapchat’s wariness of advertising may have contributed to a less-than-ideal financial situation. Despite its popularity, leaked financial documents obtained by Gawker show the company losing $128 million between January-November of 2014, while bringing in only $3 million in revenue.
Granted, these figures don’t take into account Snapchat’s new “Discover” feature, which launched earlier this year, charging a staggering $750,000 a day minimum (or $100 per 1,000 views) for advertisers. In Snapchat Discover, publishers (including National Geographic and Cosmopolitan Magazine) house content within their own dedicated page, and users will occasionally encounter full-screen vertical ads as they flip through a brand’s Discover page. Snapchat has capped the number of publishers on Discover at fifteen (up from its previous cap at twelve, as Mashable, IGN, and Tastemade were just added to the mix last week), arguably making it easier for publishers to see huge audiences on Discover. For example, Cosmopolitan has been averaging 1.82 million Snapchat viewers per day and selling ad space to major brands such as Maybelline.
Despite Discover’s early success, advertisers have been hesitant to sign up. Although Snapchat’s ad rates have recently been reduced to $20 per 1,000 views, Discover has been averaging only 2.5 ads a day (in comparison to an average of 110 stories per day) since July 13. There may be other factors besides the expensive ad rates: Snapchat’s ad sales team didn’t start actively selling Discover to advertisers until late July, and several publishers have been focused on building brand awareness and audiences on Discover before selling any ad space. For instance, Discover publisher iHeartRadio decided not to include ads in its channel for a month after its initial July 27 launch. Carter Brokaw, president of digital revenue strategy at iHeartMedia (the parent company of Discover publisher iHeartRadio) stated, “We have initially launched our Discover Channel ad free to engage users with a clean experience to demonstrate the great breadth of content the channel will feature and also build our stats to show advertisers the power of iHeartRadio on Snapchat.”
The anonymity of Snapchat can also present a challenge to advertisers, who are used to tracking and compiling data on users in order to serve them relevant, targeted ads. On most social media platforms, brands can respond directly to user comments, determine which posts are driving traffic to their site, and re-target prospective customers. In contrast, untraceable, vanishing ads on Snapchat leave digital marketers guessing about their audience and what ads are resonating with them - similar to buying a full-page ad in a newspaper and hoping that it reaches the right consumer. Although Snapchat can count views, it can’t provide data or analysis on those views. Despite the promise of access to millions of younger users, Snapchat’s lack of basic targeting and measuring tools can leave many advertisers feeling skeptical.
The upside of Snapchat’s non-targeted advertising is that it could encourage brands to re-think the way that they connect with consumers. Just because advertisers can’t track whether a user clicked on their banner ad or re-shared their post doesn’t mean they’re not building brand awareness. Rather than driving younger users away by sending them individual messages or serving ads for the same product across multiple sites and platforms, brands can introduce themselves gradually to young people - not, in the words of Evan Spiegel, as “creepy” and “annoying”, but as brands that young consumers can engage with on their own time, at their own pace. Needless to say, only time will tell if digital advertisers can get on board with Snapchat Discover, or if the lack of data will scare them away.