Why Advertisers Are Forking Over Big Bucks for Custom Snapchat Lenses

14 brands have purchased them in 5 weeks

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Snapchat is set to cash in on its surreal selfies. Eight months after securing 20th Century Fox for its first sponsored lens to promote The Peanuts Movie, the number of marketers signing on for Snapchat's bespoke filters has steadily grown. Lenses, which add colorful filters to selfies—from rainbow vomit to zombie faces—are wildly popular with users, namely millennials. Lenses change regularly, keeping users coming back every day. And since last fall, brands can pay Snapchat to create sponsored filters that appear in the same section of the app for one day at a time.

"Snapchat is a very shiny object right now," said Craig Atkinson, chief investment officer at PHD. And sponsored lenses are "probably the white-hot center of their shiny object for a marketer."

Adweek recently tracked Snapchat's sponsored lenses to see which brands are buying the pricey ads (The Peanuts Movie campaign reportedly cost $750,000 for 24 hours on Halloween) and what future campaigns may look like. Demand has steadily risen and for 36 days spanning nearly all of June and the start of July, 14 brands ran sponsored lenses in the U.S., meaning that Snapchat sold the ad unit roughly once every three days. Six film studios including Sony Pictures, Universal Studios and Pixar purchased the ad to promote summer blockbusters such as Finding Dory and Ghostbusters aimed at Gen Y consumers. Meanwhile, Starbucks, Michael Kors and the Las Vegas Convention and Visitors Authority (LVCVA) also created ads with branded decals, and three beauty brands (L'Oréal Paris, Urban Decay and Benefit Cosmetics) produced campaigns that applied makeup filters to selfies.

Wende Zomnir, Urban Decay's founding partner, explained that she was willing to pay for the ad unit because of its real-world application. "It was us taking something that people are already engaging with and creating a more playful way to execute it," she said.

Snapchat is forking over some of its ad business to 20 creative and tech companies to sell and make vertical video ads as part of a much-anticipated API (application programming interface). While the API represents the Venice, Calif.-based tech player relinquishing some control, each sponsored lens will still receive the white-glove treatment from Snapchat's internal creative team. A sponsored lens takes an average of six weeks to create, and marketers lean heavily on Snapchat to both develop the creative and apply it to the custom ad space alongside the app's daily offerings. Once the lens is built, marketers work with Snapchat to tweak the final creative before it runs.

For tourism client LVCVA, R&R Partners created a filter that applied a pair of sunglasses to consumers' faces to make it look like they were at a pool party, complete with beach balls and inflatable toys. The agency provided Snapchat with all of the assets to build the lens, which went through a few revisions. "They came back and originally the beach balls were too big [and] you couldn't see them coming across the screen," said Cyler Pennington, content director at R&R Partners. "We edited it a ton, and it was very collaborative, but they definitely did the building work." In one day, the ad was viewed 41 million times and played with by 29 million users.

That custom process comes at a price, though. Sources say prices started increasing this month, up to $600,000 for one-day takeovers and more than $750,000 during big holidays and events. "Premium would be a significant understatement," remarked PHD's Atkinson. He added that ad prices can dip to $275,000 on less popular days, but "those are pretty rare."

Snapchat is pitching higher prices because more people are using the lenses on a daily basis to send photos and videos to friends, noted Monique Lemus, group director at The Media Kitchen. "Prices for the lenses are going up, but what Snapchat is saying is that they've also seen an increase in use of the lenses," she explained. "When you start looking at cost-per-user, cost-per-view, it ends up being more efficient—even if the buy is a little bit more money."

For instance, Benefit Cosmetics purchased its ad space in February, four months before its campaign ran. "We locked ourselves in earlier this year, but I know the lens [pricing] continues to go up because of the popularity of the lens," said Nicole Frusci, Benefit Cosmetics' vp of U.S. brand and digital marketing.

The payoff can be huge, especially if a lens goes viral. That's why, according to media buyers, back-to-school inventory for the lens is already scarce, if not sold out.

"The typical lens in a day gets a couple million of uses," said Elias Plishner, evp of digital marketing for Sony Pictures Entertainment. "The real value however is not the number of times it's being used, but the number of people who view content created by Snapchat users with the lens, which could be in the tens of millions."

With more users playing with lenses and growing interest in Snapchat's measurement and data tools, sources say that the app is also beginning to sell the ads in packages where brands can run more than one sponsored lens at a time. Twentieth Century Fox tested a takeover format in May to promote the movie X-Men: Apocalypse. One agency exec pegged the X-Men campaign's price as "in the seven-figure range."

Those high prices may work for film and entertainment brands with multimillion-dollar budgets, but Tim Villanueva, head of media partnerships at Fetch, questioned if costs will drop significantly enough for smaller brands to get on board. "Our concern is, how do you scale this?" he said. "It's going to be difficult to manage it in-house, but [Snapchat is] pretty bent on doing that still, and they're not worried about scalability issues."

Take a look below at all 14 sponsored lenses that ran in the U.S. from June through July 7.

This story first appeared in the July 11, 2016 issue of Adweek magazine.

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@laurenjohnson lauren.johnson@adweek.com Lauren Johnson is a senior technology editor for Adweek, where she specializes in covering mobile, social platforms and emerging tech.