Wall Street investors seem undecided about whether Snapchat is indeed the wave of the future or just a flash in the pan.
But one month after its IPO, the messaging app’s execs are doggedly focused on broadening Snapchat’s appeal to brands—notably direct response-minded companies.
“Snapchat has a perfect opportunity to become a direct response powerhouse, especially for location-based marketing to millennials,” said David Deal, digital marketing consultant. “Though Snapchat needs to mine data about millennials more effectively to beat Facebook and Instagram.”
To that end, effective April 3, millennial marketers will be able to zero in on Snapchat users who are most likely to download their brand’s app, targeting slivers or swaths of the platform’s 160 million users who have shown interest in either the brand or the functionality it’s offering. These app-install ads allow the marketer to set cost-per-download goals in a measure that’s designed to get app marketers of all budgets into Snapchat’s business client pool.
Snapchat, part of Snap Inc., has ramped up its machine-learning and audience-segmenting capabilities for app installs since its beta product went live in October—to date, it had offered only rudimentary targeting tools to a select number of brands. The new system charges ad buyers on a cost-per-thousand-impressions scale that’s based on auction-style, competitive bidding. “[It’s a] cost-efficient way to drive app installs right from Snapchat,” explained Peter Sellis, Snap’s director of monetization product.
Also today, brands can serve follow-up ads (re-marketing, in industry parlance) to those who have interacted with Snapchat’s sponsored lenses, geofilters or videos. Such behavioral data can be employed to reel in everything from a fitness app download, to a test-drive appointment for an automaker to a shoe purchase via ecommerce. The company believes advertisers will want to take aim at consumers in what direct response practitioners call the “consideration stage.”
“We’ve been listening closely to direct response advertisers,” Sellis revealed.
He’s listening for good reason: eMarketer’s latest figures for 2016 had the U.S. app-install advertising space valued at $5.7 billion. Facebook has reportedly, at times, seen up to 20 percent of its ad revenue, which totaled nearly $26.9 billion last year, from app installs. Google is increasingly a huge app-install contender, and Pinterest just last week rolled out its own app-install ads system. So, Snapchat’s competition is fierce.
“Right now, Snapchat doesn’t move users outside its own environment, so we would expect a longer time for user behavior to adapt,” remarked Emmy Spahr, media director at SapientRazorfish. “Pinterest, on the other hand, actively works across other websites and shopping experiences, so users are already engaging with the platform and websites—adding app downloads here would be seen as a value add.”
Spahr’s comments about Snapchat didn’t jibe with a few of its test partners like Pocket Gems, Acorns and Omnicom-owned Resolution Media. As one example, David Rose, director of performance marketing at Pocket Gems, said his brand has seen a 1 percent click-through (or swipe-up, in Snapchat vernacular) rate. “Given the high levels of engagement we’re seeing,” he said, “the results are strong enough to increase our app-install budget for Snapchat.”
Whether marketers follow Rose’s lead may actually depend on Facebook. The digital giant, which also owns Instagram, last week debuted Snapchat-like Facebook Stories, a feature its 1 billion-plus mobile users may adopt in droves. The Snapchat-mimicking move brings to mind Instagram Stories, which has attracted a phenomenal 150 million daily users since August.
“Snapchat’s challenge with Facebook and Instagram copying features gets to the users side—the audience size and reach,” said Cathy Boyle, principal analyst at eMarketer. “The more [Facebook’s apps] have look-alike features—that just continues to put pressure on Snapchat to continually grow its global audience. It’s less about its ad-targeting capabilities and more about reach.”
And even though app-install ad options are aplenty with Facebook and Google, Boyle said, the marketing community “would prefer there be a third big player.”
“Snapchat can make a dent,” she added, “but it will not happen overnight—it is going to have to first prove ROI.”