Tv Ad Spend Snap In-depth

Are brands convinced Snapchat is the new TV?


By Seb Joseph, News editor

February 10, 2017 | 9 min read

Snapchat’s efforts to prove millennials are turning it into the ‘new TV’ has started to leave marketers in the dark as to why they should spend big on content that will be shortlived.


Are brands convinced Snapchat is the new TV? / Snapchat

That’s not to say they aren’t tempted by the platform’s vision for mobile TV. Rather they are struggling to understand what that pitch means for them and how to activate it. What’s more, Facebook’s unabashed attempt to imitate the app’s core features over the last year has left some advertisers perplexed, asking ‘if we can reach an audience with a real-time story on Instagram is there value in Snapchat?’

Trepidation in the market isn’t lost on the app and it dispatched chief strategy officer Imran Khan to pitch to Publicis executives and clients last month. But neither Publicis or any of the other big holding groups appear convinced that Snapchat’s ads are better than TV to commit the $100m to $200m the Wall Street Journal reports it wants. For all Snapchat’s meteoric growth, advertisers are yet to view it as the platform of choice to reach younger audiences because media-buyers don’t have the hard evidence on what they’re getting in return for an increased spend.

“There’s no doubt that Snapchat is a much more expensive platform to advertise on than any of the other social networks,” admits Tim Love, the senior social media manager at Pizza Express. He explains how this makes it “extremely difficult” for brands to test, arguing that “you either have to go all in or you can’t advertise”.

The intimate nature of the app has also made it harder to build a community in the “way that you’re able to elsewhere”, he continued, while the lack of detailed demographic information means “we’re constantly told that it’s a younger audience, but that’s not enough."

Snapchat would argue its ads are working; Starbucks clocked up 117 million views for a campaign that included a sponsored lens gaining 23 seconds of play time on average, while Adidas claims that people regularly watch its content on Snapchat for longer than they do for YouTube. Impressive as the feedback is, neither Starbucks nor Adidas have set a fully-fledged role for the app in their marketing plans, at least not in the same way Heineken or Diageo’s thought they had when they signed direct deals with Facebook in 2011 prior to its IPO.

“The main reasons we come up against [getting advertisers to spend on the platform] are around ephemerality,” says Hannah Chaston, social director at Iris. “There is still a feeling that it is a poor use of money to create content that will be ‘shortlived’. And there is still a job to do by the platform to show that it is not solely used by sexting teenagers. In reality, the demographics are shifting quickly but there is a real blocker in the minds of some marketers.”

Overcoming this barrier in the UK rests with general manager Claire Valoti and creative head Will Scougal, the latter of whom The Drum understands is focusing more of his sessions with agencies on Snapchat’s shifts in demographics alongside its breadth of new ad formats. Youth is great when those younger than 25 visit the app 20 times a day on average for around half an hour but they are also fickle, as the business has admitted.

On the flipside, the number of Snapchat users aged 35 or older surged 224% year-on-year in the final quarter of 2016 to 33 million, according to researchers MoffetNathanson. However, these older users spent just three minutes per day on the app in the fourth quarter, down from the five minutes a day in the second quarter.

“We think if anything, Snapchat is closest to Instagram today in terms of demographic breakdown and growth profile,” claimed the analysts in the report. “We don’t think it will ever reach the penetration of 35+ saturation of a Facebook nor will its ascent be as fast, however we also don’t believe it will flame out and ultimately fail as spectacularly as Twitter either.”

Unlike Twitter, Snapchat knows what it is, and knows what it isn’t; akin to a broadcast platform, the mobile message app is trying to deliver a content-rich environment through stories, video content and immersive ad formats in a way that emulates the experience TV advertisers are used to. Content deals like the one it just announced with entertainment company A+E serve to close that gap but experts believe Snapchat’s main draw is still the potential to have an audience spend time and interact with brands in a full screen through lenses, filers and video ads.

It is an experience (for now) that pushes marketers to be creative in ways they can’t on other social networks. Khan stresses this is a more mobile native experience to advertisers, juxtaposing Snapchat’s sound-on video ads with the “moving banner” sound-off equivalents touted by rival networks.

“For a majority of brands, the key thing to remember is that Snapchat isn’t about you – the audience likely doesn’t want to hear from a brand like they do from their friends,” says Laurier Nicas Alder, head of social at TMW Unlimited. “For many brands, it’s about smart advertising tailored to a specific audience – Snap ads, clever lenses/filters and publishing partnerships will be much more beneficial for your brand than a constant stream of story content.”

Snapchat has had this view on advertising since its inception but the arrival of self-serve advertising on the app last month means advertisers can now run their own campaigns similar to how they might on more established platforms such as Facebook. Now, advertisers will want to look at how video content performs on Snapchat in comparison to other platforms such as Facebook and YouTube.

“I think it is long term from a measurement perspective…we need to be looking at attribution modeling and the inputs that the various channels are feeding,” said Katie Manor, interim head of paid social at Mediacom Worldwide when asked for her view on Snapchat’s push for TV budgets.

She explained how Snapchat is “very proactive” in taking about measurement transparently, adding that even though its attribution models “are still not perfect”, the team is “upfront about integrating into that into their solutions”. `They have also taken great strides to improve measurement over the last six months and it now partners with 15 different third-party measurement vendors in the US, including deals with Nielsen, Oracle and Moat.

But until it’s clear that more people are watching and consuming Snapchat rather than Facebook, Instgaram, YouTube and the rest, it’s difficult for advertisers to justify any big bets on the app. Now more than ever before advertisers are scrutinising where they invest online, creating a chance for the mobile messaging to establish the wider Snap business as the third force to Google and Facebook.

“There’s an opportunity for Snapchat to secure the big deals with the holding groups and I think it would make potential investors feel much better [about its prospects],” says Catherine Boyle, eMarketer’s principal analyst for mobile.

“That would definitely help with the IPO and the confidence of the market if they can get big holding companies to at least give some verbal assurance that they plan to invest in Snapchat. In the second half of last year, Snapchat really tried to address some of the concerns of the major advertisers, which were mostly around targeting and measurement, and now they’re saying ‘we’ve give you everything you want, now can you make some commitments’.”

As well as advertising deals, the messaging app has inked a slew of content partnerships with some of the world’s biggest entertainment owners including Viacom and NBCUniversal. More recently it appears to have been eyeing how it can work with networks to produce original content within its Discover section, AKA Snapchat Shows. Indeed, its deal with A+E Networks will create the first unscripted show for the app, an investment Snap’s vice-president of content Nick Bell said showcased what storytelling on Snapchat is all about – “the ability to create premium and wholly original content,” for a mobile-first audience.”

At the end of last year Snap’s Khan laid out the upstart’s ambitions to be “bigger than just one app.” Its 150 million-strong base of daily active users are concentrated in the 18 to 24 year-old demographic, but Snap has underlined Nielsen data demonstrating Gen Y's shift away from linear TV in its IPO document, hinting at the revenue opportunities this could offer up on the content side.

Though a younger generation may be shifting attention from traditional media to mobile, Snapchat alone will not take over TV's share of the advertising market. Social advertising has long been eating into the traditional sector, so this story isn’t new – TV still has a role to play but Snapchat clearly has a firm grip on the millennial and generation Z crowd, and this shouldn’t be ignored.

Additional reporting by Rebecca Stewart.

Tv Ad Spend Snap In-depth

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