Snapchat is no longer bleeding users. While advertisers can take some joy in the modest growth its parent company Snap shared in its first quarter earnings report, the industry is eyeing how Snap builds out its latest ad offering.
Earlier this month, Snap announced plans to launch its Audience Network, which will integrate its inventory of vertical ads into third-party apps.
On the earnings call, chief business officer Jeremi Gorman said Snap is taking a long-term approach to building out its Audience Network, which will hit the market later this year.
“We're growing the list of partners deliberately,” said Gorman. “We don't expect [Audience Network] to have a material impact on revenue in 2019 as we're making this a very deliberate, long-term strategy for the business.”
Though Snap is taking the long view, Gorman said the company is “excited by the response” from publishers and ad partners on connecting with Snapchat’s core demographic of users ages 13 to 34.
While Audience Network is nothing new – Facebook and Instagram already have a robust network – Snap is hoping to pitch its unique audience to advertisers. On the earnings call, chief executive officer Evan Spiegel claimed that Snapchat reaches more 13- to 34-year-olds than Instagram in the United States.
Phillip Huynh, vice-president of paid social at 360i, said being able to extend reach to infrequent Snapchat users is attractive, but it may not be enough of a differentiator from Facebook’s offering.
“Unless the final product is markedly different from Facebook, [like] providing full transparency or allowing programmatic extensions of their Discover partners, it’s difficult to see the added value,” said Huynh.
One publishing company executive said “curious” may be a better word than “excited” when describing the response from publishers as a whole.
“Overall, any enthusiasm among publishers is curbed by a sense of skepticism. The relationship between platforms and publishers is heavily skewed in favor of the former. There’s no reason to believe anything here will change that dynamic,” said the executive.
To garner actual excitement over Snap’s Audience Network, the executive said he hopes to see attractive revenue splits and a clear, intuitive brand safety policing mechanism.
A Snap spokesperson wouldn’t comment on what revenue sharing would look like, but did say the company will manually review every third-party app and ad placement to meet brand safety concerns. Snap is focusing on a “small set of publishers” as it plans to build out the network gradually.
An executive at a digital publisher said the new ad offering signals positive growth for Snap.
“It only makes sense that their ad product gets a little bit more sophisticated and a little bit more robust to complement the fact that the platform is reaching such a high percentage of young people... All of the advanced metrics should suggest that this would be a great place for media buyers to spend money,” said the executive.
Media buyers could just as easily do business with Instagram, which requires a similar vertical creative format. Instead of seeing that as potential competition, Gorman believes it will help address Snap’s main concern when working with advertisers who aren’t used to creating six-second, unskippable vertical ads.
“Our number one hurdle is that our ad formats are different than you would traditionally see on desktop, TV or even other digital. They are not assets that everybody would have at their disposal,” said Gorman.
Gorman said Snap’s product team has been closely working with its advertising partners on automation that will help build creative assets at scale.
“As these formats...become more common across the overall advertising ecosystem outside of Snap, we suspect that other people [will] have these assets at their disposal, and that becomes less of a hurdle for us.”
Snap today named former McDonald's executive Kenny Mitchell its first chief marketing officer for his "deep understanding" of Snap's products.