Things are hotting up for advertisers on Snapchat, but as the platform matures can the honeymoon phase last?

Everyone from Coca-Cola to Nationwide, Adidas to Cadbury, Starbucks to Dominos has come knocking on Snapchat’s door for a slice of ad action this year. Initially, however, brands were cautious to take the leap - with early criticisms being levelled at the cost of ads, concerns around data and lack of measurement.

In June the messaging app announced a slew of new features designed to cater to many of these' concerns and ever since business has been hotting up.

The mammoth expansion included the roll out of an API, which is opening up Snapchat to select third-party advertisers and ad tech companies for the first time. It also announced plans to steamline its ad formats, introducing ‘Snap Ads’, a term under which its 3V products (vertical, video and views) were to be grouped into a suite of interactive action-oriented units.

Plans to serve these ads between users’ ‘Stories’ within the app, ie allowing branded content to sit between the videos people share with their friends, were met with some skepticism among social media users - indicating how just how carefully the app will have to walk a tight rope when it comes to keeping its 150-million strong (largely millennial) userbase and advertisers happy.

In short, Snapchat is growing up, but now the pressure is on it, and the brands using it, to ensure they craft experiences that don’t scare its young userbase away.

Intimacy

Nonetheless, it's clear brands are getting much more confident on Snapchat, which will be welcome news for the startup given its rumoured $350m ad revenue target for 2016; a figure that's in line with a recent eMarketer report which suggested that Snapchat could pull in as much $1bn in ad revenue by the end of 2017.

Advertisers like Sony Pictures Entertainment, which was first out of the gate last month with Snapchat’s new 360-degree video format, have sought to capitalise on Snapchat's grip on video. In April, the app announced that it had doubled the number of daily video views on its service to 10bn in under a year, a figure which rose from 8bn in February and just 4bn last May.

Sony Pictures' international digital marketing vice-president Aaron Wahle commended the intimate nature of the app compared with other platforms. “One of things I really like about Snapchat is it’s a personal experience – the way that they present things is seen as content rather than advertising," he noted.

“We’re lucky in the entertainment industry that most of our stuff is seen as entertainment rather than advertising, but the way that they [Snapchat] present it, you know, the personal nature of your own phone is just something that’s intimate.

"It’s not the same experience as the theatre, which is a great experience too but we reach people in their moments of decisions. We run these ads at a certain time of day, in a certain place, when people are trying to make their movie going experience decisions.”

Snapchat's very nature as a messaging app looks to be giving it the edge over bigger social platforms like Facebook when it comes to creating intimacy between viewers and the ads they're watching, and advertisers are going googly-eyed over the opportunities this could present.

Back in May, Starbucks served up a Filter to promote its latest Frappuccino range, and the brand’s digital marketing manager, Jamie McQuary, said its planning more campaigns on the app going ahead.

“Snapchat is opening up to new opportunities in advertising. When it first launched there was only a few things you could do, but out of all the social networks it has done the best job bringing advertisers in at a really early stage.”

“It has a lot of variety with the ad opportunities,” she added. “We have run a sponsored Geofilter, videos within some of the 'Discovery' channels, and we have plans to work with them in the future with on a Lens and video. There are so many opportunities for advertisers to be a part of the platform, with other platforms there aren’t as many opportunities that are accessible so early on.”

Starbucks' Frappuccino Snapchat campaign

No frills

Earlier this year, the social startup’s vice-president of content Nick Bell said that brands “hadn’t quite grasped” the no frills element of the app, although now it could be argued that its colossal advertising overhaul has indeed embellished it a bit.

“The word authenticity is overused,” said Bell at the time. “We don’t surface vainity metrics because it’s not about trying to capture that perfect sunset to see how many likes you receive… It’s more about removing the pressure that social media has created.”

This rough and ready feel, argued Holler co-founder and Bigballs Media chief strategy officer James Kirkham, is something that needs to be retained if Snapchat wants to remain the service of choice for its largely millennial subscribers as it continues to make money from them with ads.

Its young audience, said Kirkham, believe in the platform “more than any other” because it offers an alternative to its overly-manicured and stage-managed competitors.

“If anything begins to dilute, cloud or interfere with this then it will suffer the same long-term issues as some of its competition. Facebook has famously lost some of the hearts and minds of teenagers in the West (for example) who now include it for a far more perfunctory role in their suite of social. It is no longer for them an essential.”

In February of this year Adidas’ global social media director, Daniel Bulteel, told The Drum that it viewed Snapchat as its “raw and real” platform. Seven months on, the brand has moved away from trying to only innovate organically on the messaging app to experimenting with targeted Geofilters to help own key sporting moments like the London Marathon.

Now, Bulteel asserted the sporting giant thinks the “most exciting” aspect of Snapchat’s new ad offering is how it will open up the service to different areas of its business.

“In the past Snapchat was primarily a tool Adidas used to generate advocacy and reach with our stories, but now we can drive traffic to our mobile website to explore a product in more detail or convert with an e-commerce journey,” he said.

This ability to be part of a consumer’s purchasing journey isn’t something that has gone unnoticed by brands, not least 20th Century Fox which recently made use of the service’s ticketing ad unit to let users buy cinema tickets for X-Men without leaving the app’s walls. The studio even purchased Snapchat's entire filter reel for an exclusive Lenses push; something that was widely panned by frequent users.

Alex Whittaker, head of strategy at digital agency Possible said the backlash "was an early taste of what can go wrong when a growing platform chases commercial gains too quickly."

"There is also likely to be increasing scrutiny from the various advertising watchdogs as celebrities begin to use the platform for product endorsements, and Snapchat’s current reluctance to share much in the way of data can be a turn off," he added.

These tools may be great for marketers and do follow in the footsteps of the likes of Facebook which has been making it easier for subscribers to buy products without leaving their newsfeed, but coupled with the shiny new API could they inhibit the “authenticity” that Snapchat prides itself on?

Testing before investing

Adidas for one has promised that it absolutely wants to make sure its advertising is “valuable and relevant”.

The brand’s Bulteel pointed out that it spends a lot of time testing and running pilots in key markets and locations before they’re scaled globally or run across other areas of the brand. “We’ll take the same approach with Snapchat’s new advertising platform and test before we invest,” he promised.

Snapchat itself has been quite firm on this, saying it will be “careful” about how many ads its users will see as it looks to strike the balance between wooing brands and keeping its users happy.

The app has also emphasised that while an API does mean advertisers won’t have to go through Snapchat to buy and manage video campaigns, that real-life humans will review every ad for “quality” purposes. However, reports suggested that it has already upped the number of ads it is serving between Stories since June; something it has not yet commented on.

For Kirkham, the careful approach is the right one if Snapchat wants to hold on to its “legitimacy and authenticity”, but he warned that “advertisers need to be wary if the impending programmatic ad inclusion serves only to disrupt” what the platform is known and loved for.

Possible's Whittaker, agreed that brands should also be cautious in the advances they take. He warned that while Snapchat's "explosive growth" and "highly engaged" young audience may be hard to ignore, that it should still be a case of looking before leaping.

"The fast moving and anarchic nature of the platform may suit younger brands like Taco Bell and Dominos, but this is a userbase which is very protective of their platform."

Obvious advantage

Sony's Wahle, meanwhile, asserted that Snapchat's data means Sony is not "buying the place," it's "buying the person", adding that this psychographic approach to marketing is where he is personally "much more comfortable."

This fresh position runs contrary to other marketers' earlier complaints that Snapchat's targeting capabilities were lagging behind its rivals.

As well as contextual ads on its Discover platform for publishers, Snapchat currently offers targeting options around age, gender, location, devices and mobile carriers.

Commenting on the Snapchat push for Sony's new horror flick, Don't Breathe, Wahle hinted that the seemingly limited targeting opportunities weren't as much of a big deal in the entertainment industry.

"You know, certain 60-year-olds are just as likely to watch Don’t Breathe as a 16-year-old – if you’ve been a horror fan your whole life then we need to get at you," he said, adding: "it doesn’t really matter what you’re age, gender or location is.

"I’m much more a psychographic marketer anyway and I think programmatic has an obvious advantage in that," he added, when asked about Snapchat's API plans.

Snapchat is also poised to introduce behavioural targeting by the third quarter of the year according to reports, meaning advertisers will be able to tailor campaigns based on the type of content Snapchat users consume.

Pharrell Williams took over Adidas' Snapchat channel earlier this year for its global Adidas Originals 'Pink Beach' collection launch

Part of the experience

Another hurdle faced by Snapchat is that it's too pricey to purchase and create ads for the platform, a perception it has set out to clear up by making it easier for brands to invest in formats other than it's hallmark Lenses.

Four months ago, the app's vice-president of content Bell made it clear that while this might have been true for the earliest campaigns bought on the platform, it isn't anymore.

“To be frank we never had a huge technology platform so if you wanted to run a campaign you had to reach a mass audience and therefore you would get huge reach and therefore it was more expensive,” he explained.

“Some of those numbers are still banded around as being the entry-level price point for Snapchat and that’s no longer the case."

The startup has just announced that its Geofilters, which were introduced in February, will now be easier to create for brands via customisable templates.

Geofilters are being viewed by Snapchatters over one billion times a day according to the company; double the previous rate of the 500 million it reported earlier this summer.

"It has added in all these other opportunities where the cost isn’t as much as doing a Lens or a Filter," said Starbucks' McQuary, "It quickly realised not every advertiser can spend the budget for a Geofilter or a Lens."

Ribena is another brand that has been hedging its Snapchat bets on Geofilters. As part of its experiential 'Colouring Cafe' drive the brand designed one of the location-activated overlays for influencers attending the event to share with their friends.

"The Geofilter, as opposed to ads, feels more relevant and connected within that platform," noted the Suntory-owned firm's brand manager Emmeline Purcell.

"It doesn’t feel right to be serving an ad in that environment you need it to part of the experience," she mused, "and that’s how we would want to approach it so that we’re adding to the quality of someone’s experience not just serving them an ad in there."

Whittaker concurred that in order to succeed, brands need to go into the platform with their eyes open and develop campaigns which fit with Snapchat's ephemeral and one-to-one nature.

"For those wanting to put a toe in the water without fully embracing Snapchat the ad placements in Discover are a safer area to start experimenting," he asserted, "bringing with them the fun pace of Snapchat with the control of sitting alongside established media brands."

Having shaken off its reputation as a 'secret' app for selfies and sexting, the interactive and persional "experience" Snapchat offers is what keeps its users coming back.

In the US at least, eMarketer has forcasted that the app's popularity will spread beyond millennials and teens, and predicts two more years of double-digit precentage growth in terms of its monthly active users (MAUs).

It's clear the company has a fine line to walk between courting more advertisers, and keeping eyeballs on screens, and with big names flocking to it, high ad revenue expectations and increasing user numbers it has no choice but to balance the scales.