Will 2016 be the year of Snapchat for advertisers?

For most advertisers, the quickest win available to them on the social network has been to bypass its eye-bulging ad prices and get influencers to push messages out through their channels. It’s meant that many marketers are carefully considering Snapchat on a brand-by-brand basis as to the appropriateness, role and nature of content in this environment and indeed the reach opportunities.

However, Snapchat wants to be a premium media buy; a string of high-profile hires for its fledgling ad business and rumours of the arrival of an ad tech platform later this year highlight its bid to become more than just a messaging app to advertisers. Executives have been meeting with agencies in the UK since the turn of the year to discuss future opportunities around sport and music, both of which are pitched as big opportunities for potential advertisers, according to one source close to those discussions. Those meetings are also understood to have teased more meaty partnerships from Snapchat’s publisher network Discover and, interestingly, have been at pains to stress that it is not just the preserve of teenagers.

More than 75 per cent of Snapchat users are over 18 years old, said one agency source, making it a sensible media buy for those who can afford it. Unilever is one advertiser that can and is understood to be motivated by the prospect of an older Snapchat audience, with its chief marketing officer Keith Weed recently tweeting that “if Snapchat can capture the older generation, then even more revenue will follow”.

Life after a Snapchat campaign

Yet it’s clear from the advertisers and agencies The Drum has interviewed for this article that many of those interested in the platform aren’t sure whether to build an audience now, while there’s a lack of competition, or wait to see what tools they are given. For all its promise as a platform unique in the way it combines transparency with privacy, Snapchat’s closed system is interpreted as a fiefdom of sorts by some observers.

“Data integration and isolation is tough and it’s difficult to integrate creatively inside a platform that doesn’t like to link out into the wider digital sphere,” says Jamie Toward, managing partner of content at Karmarama.

“Without being able to integrate the data points of part of the marketing mix we end up flying blind on that aspect of our investment and how it interacts with the other levers we can pull for clients… Ultimately, agencies need to do the right thing by and for their clients, and that means having some certainty on which to base investment decisions.”

The key issue perhaps is in ascribing marketing effectiveness in Snapchat and isolating its effect inside a wider marketing mix. Snapchat is very expensive; swiping past an ad on a publisher’s channel is counted as a ‘view’, and there’s very little tracking to show how long an ad has been used for by a user. Without these data points, the platform’s advertisers are flying blind to some degree, a discord Adidas wants to be tackled this year so that it can spend more on the channel.

“It’s going to be interesting to see how Snapchat grows up because it’s just so fundamentally different [an] experience,” says Adidas’ creative strategist and digital experience specialist Kris Ekman.

“We’ve done some tests where we think it fits with our brands; we have one called Adidas Neo, which is our fashion brand for younger people, that we’ve done some work on with Justin Bieber. We don’t really have a way to see how Snapchat will grow up and so at the moment we’re exploring and finding that out.”

By offering more measurement and targeting options the messaging app could bring advertising costs down, as brands won’t be paying for a huge swathe of Snapchatters to see their ads. At the moment, there aren’t many opportunities for brands to see the type of return they’re seeing on other social platforms.

“Snapchat feels both progressive in that it’s different and people feel like they need to be there but it also isn’t offering all the things brands are now expecting from digital,” says Scott Lindenbaum, digital strategy director at Deutsch, the agency behind Taco Bell’s efforts on the app to date.

“Taco Bell has done some activity in the platform but for other brands of ours – even if we have an interesting idea – because there’s no way to link out from it and their core consumer doesn’t use it, it’s like we’re telling them to do something that’s strategically unsound for the purpose of learning.”

Time running out for Snapchat’s ‘newness’ premium

At the minute, Snapchat is definitely the shiny new platform and as such is attracting a ‘newness’ premium. A recent decline in ad rates as The Drum understands it is further proof that the premium is at risk, with a CNBC report earlier this month claiming that prices have plummeted from $750,000 for a one-day ad to $50,000 over the last 12 months.

That discussions about the value of Snapchat's ads are becoming more commonplace is not lost on its executives. Analytics firm Moat has been hired to check how many people are actually viewing ads, according to AdAge, alongside rumours that marketers will eventually be able to track users beyond the platform as part of beefed up targeting options.

Such is the importance of forging a robust advertising proposition that its “chief operating officer is interviewing everyone himself” from San Francisco every two weeks, according to a source close to the business, who claimed those candidate interviews spanned the “most junior to the most senior”. Add to that reports that some of the roles being interviewed for include a UK managing director, a global head of measurement and a head of global sales and it’s clear that Snapchat is putting the final pieces together to become a major advertising proposition.

The social network’s meteoric rise is happening inside the rapidly growing instant messaging sector and faces stiff competition for usage from WhatsApp, Facebook Messenger, Kik and, in China, from WeChat. Some 70 per cent of Snapchat users are also using Facebook Messenger, according to Global Web Index, so Snapchat is in a commercial race for eyeball time and attention.

Can Snapchat challenge Facebook in video ads?

A pivotal decider of that outcome will be video. Snapchat’s daily video views are rapidly catching Facebook at around 7bn views compared to the latter’s 8bn, according to leaked figures. A foothold in the mobile video market creates ample opportunity for ad revenues, given that eMarketer predicts mobile’s share of total digital video ad spend will hit 47.7 per cent in the US by 2019.

Activision, Fox and Domino’s are among a hatful of advertisers to test videos that play either in between content or as a series of stitched-together posts in a Live Story. Domino’s, for instance, ran video for 24 hours on the channel last month and its head of digital Nick Dutch confirmed its success would see it run more tests.

“Video is much more accessible on Snapchat and it’s more natural there than on some other platforms,” he adds.

Dutch says that while video was the way “forward” on Snapchat, there is no point comparing it to some of the other platforms because it’s not an “apples and apples” comparison.

Snapchat’s multi-year deal with Viacom, which will see the broadcast giant sell ads and pump out daily content within the app, will underscore its play for more video budgets, promising a scale comparable to TV when it comes to reaching younger viewers.

“Now that the team is being staffed up, smart signings will enable it to communicate more effectively with the outside world,” says James Kirkham, chief strategy officer at Bigballs Media and head of its high-profile Copa90 YouTube football channel.

“A technology platform such as Snapchat which has undergone such rapid growth rightly has to keep focussing on product refinement, slick efficiency, audience, funding and so is often less able to ‘act’ as though they’re a 50-year-old institution. Many might have assumed this secretive or even arrogant, but the reality is it was a brilliant business predicated on savvy owned technology and a steely main aim: to lead the world of social mobile messaging communications.”

Snapchat did not respond to a request for comment by the time this article was published.