Snapchat Ad Prices Drop from Colossal to Cheap

Snapchat Ad Prices Drop from Colossal to Cheap

Big Ideas

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June 21 2018
Marketing News

When Snapchat first opened their platform to advertisers, it charged brands $300,000 to $500,000 to sponsor a Lens, an animated filter that uses Augmented Reality (AR) technology to overlay a digital image onto the real world.

For example, Taco Bell paid $750,000 for this lens that turned a face into a taco and played music when someone took a video.

The investment required was not worth it for brands since users could skip their video ads immediately, with just a tap on the screen, and it wasn’t clear whether its custom lens achieved much at all. Agencies were bringing brands to Snapchat who wanted to target a young audience, though when they couldn’t measure the impact of the ads, it became a no-go zone for many.

Price Change

Two years later, Snapchat now has the lowest ad prices of its peers. In the first quarter this year, Snapchat ads costed an average of $2.95 per thousand impressions, compared with $4.20 at Instagram and $5.12 on Facebook.

What changed? Snapchat decided to lower the barriers to purchase by shifting from a direct-sales ad team with a highly personal touch to a fully automated programmatic ad platform. In the first quarter, 95 percent of its ads were sold programmatically—and prices were 65 percent lower than in the period a year before.

The reason for the lower pricing on Snapchat is simple: Its auctions are not as competitive as they are for ad space on, say, Facebook. Facebook has 6 million advertisers competing to run ads, and Snapchat doesn't reveal how many it has, but it's not that many by a social media mile.

Snapchat says its price drop will help it over time. "It turns out cheap prices are a great marketing tool," says Peter Sellis, Snapchat's director of product for revenue. Snapchat hopes it can use the discounts to drive more advertisers into the auctions, and if it can get them there, then it could hopefully deliver business results.

It has beefed up direct-response ads with a way to target ads to consumers most likely interested in certain brands based on online habits outside Snapchat. It's rolling out a new type of Shoppable Snap Ad, which can display multiple products and take people directly to a checkout page.

New Targeting Options Incoming

Snapchat is putting finishing touches on new ways for brand advertisers to schedule ad buys with "reach and frequency" parameters, which means they can plan ahead with guaranteed prices and audience sizes. Even sponsored Lenses are about to be offered through the self-serve ad platform for the first time, also with the "reach and frequency" option. Anheuser-Busch has already tested using self-serve to buy Lenses, and what happened? Prices dropped almost 50 percent, according to Snapchat.

"The people willing to put the work in to learn the platform, they're in a good situation right now," Sellis says.
Go more in depth and read the full article over at AdAge!​


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