Snapchat’s Pricey Ads Could Be Too Pricey

    TechCrunch tries to figure out if Snapchat’s asking price for advertising is really worth it?


    AdWeek recently reported that Snapchat is asking brands for $750,000 per day to run its new “my story” ads. Some would argue that Snapchat’s unique ad format, engagement tactics, demographics, and immediacy make for an interesting experimental advertising opportunity. Others say that $750,000 is a lot to spend for an advertising experiment that has limited analytics, no targeting, and an inability to show ROI — especially when stacked up against other digital alternatives like Facebook.


    If AdWeek’s report is accurate (Snapchat had no comment on the story), it is worth asking the question: is advertising on Snapchat worth the $750,000 price tag? Although Snapchat provides a unique advertising opportunity for brands, the more robust and cost-effective alternatives like Facebook and prime-time television make Snapchat’s high-dollar ticket seem a little too bold. Why advertise on Snapchat in the first place? Money aside, there’s a pretty long list of reasons why brands might consider advertising on Snapchat, but the best summary I’ve seen so far comes from a Medium post by Mat Yurow of The New York Times. Yurow identifies five opportunities for Snapchat as an ad platform, three of which I fully support: Snapchat’s ad format is native much like that of Facebook’s or BuzzFeed’s. As Yurow suggests, “paid posts adopt the same format and placement as organic posts.” Facebook is fully committed to premium native ad formats and BuzzFeed has created a media empire convincing people that their ads aren’t really ads. Clearly Snapchat is taking notes on these juggernauts.


    The community is required to engage with the app in order to digest “snaps” and “stories.” With Facebook and Twitter, you can passively consume content. On Snapchat you have to physically hold down a button to get content. For advertisers on Snapchat, this ensures that someone wants to see the ad and that they are looking at the screen when the ad is served. According to comScore, Snapchat is used by roughly one-third of millennials (18-34 year olds). Although that’s a relatively broad demographic, many advertisers like Red Bull only care about this group. Yurow also suggests that immediacy and mobile location data are part of the equation, but I see premium native ad formats, active engagement, and demographics as more important factors right now. Even if the ad is ephemeral, it can still influence purchase decisions at a later date, and “immediacy” is really tied into the whole engagement (No. 2) piece.


    The mobile location data piece is just not there yet, so it shouldn’t influence an advertiser’s decision to spend yet. Beyond the points Yurow discusses, there are two even better reasons to advertise on Snapchat: It’s way cool, and being cool is everything for a brand. The first ads on any platform get a lot of exposure, both from media coverage, as well as novelty-drawing views. That could be a bonus to early Snapchat advertisers….MORE HERE.