Buyers say Snap’s latest announcements may allay audience growth concerns

“They’re starting to put together the story of who they are more so than before. It’s about the camera and creativity. That has been a narrative that wasn’t for me as solidified before. When we’re talking to clients about platforms, we need that soundbite,” said Meghan Myszkowski, vp and head of social activation for North America at Essence.

That soundbite may help Snap reorient the conversation among advertisers who struggle to understand Snapchat’s product and see past its audience growth challenges. Being able to reframe advertisers’ perceptions is important given Google’s and Facebook’s continued dominance of digital advertising and advertisers’ burgeoning interest in other social platforms like TikTok, Reddit and Pinterest. Additionally, if Snap is able to not only grow its business with existing advertisers but also attract new ones, that would give the company the type of broad advertiser base that has helped Facebook’s and YouTube’s advertising businesses to weather the storms surrounding their products.

Snap’s advertising business has been somewhat mired in advertisers’ struggles to understand the app, given that middle-aged marketing executives are not exactly Snapchat’s audience. “Every brand I work with goes, ‘What is Snapchat?’ They don’t get it because they’re not on it. That’s the biggest hurdle for more brands to get on it,” said one agency exec who asked to remain anonymous.

That lack of understanding has led advertisers to focus on what they do understand about Snapchat, which lately has been that it has struggled to grow its audience. The size of the app’s daily audience has not grown quarter over quarter since the first quarter of 2018. After sequentially shrinking in the second and third quarters last year, Snapchat’s daily audience quarter-over-quarter growth was flat in the fourth quarter, which some agency execs have taken as a sign of stabilization. “Advertisers were worried users are still leaving,” said Myszkowski.

The key now is whether Snap can attract new users. Currently, Snapchat primarily pops up when an advertiser is interested in reaching Snapchat’s core user base of millennials and members of Generation Z. To get broader consideration by advertisers, Snapchat needs to be able to offer advertisers more users, and it is trying to do so.

In addition to the in-app gaming platform and new AR features, Snap is rolling out new ways to expose people outside of Snapchat to its content and ads: an option for people to cross-post their Snapchat Stories to third-party apps and an ad network to run its Snap Ads in third-party apps.

Allowing people to cross-post their Snapchat Stories to apps like Tinder and Houseparty could be a way for Snapchat to bring new or former users into the fold. “It is an opportunity to advertise the platform and have people say, ‘That’s cool content. I want to come back to Snap, or I want to open an account for the first time,” said James Chanter, senior partner at GroupM’s m/SIX.

Similarly, Snap Audience Network could extend Snap’s addressable audience beyond the 186 million people that use Snapchat daily to include less frequent users who may be found in other apps. “Snap does appear on our media plans where relevant and where we want to reach a specific audience. But what Audience Network does is it has a potential to blow that out,” said Chanter.

However, that potential depends on Snap’s answers to two major questions that agency execs have about Snap Audience Network: Will Snap be able to serve ads in third-party apps to non-Snapchat users, and will Snap offer tools for advertisers to control where their ads may appear across the ad network? Snap has yet to answer either question as it is still in the process of signing up apps for the ad network before pitching it to advertisers.

“When I’m talking to clients, across the board they’re concerned about the audience footprint. [Snap Audience Network] allows them to reach more people. But it comes down to where the ads will be running and what brand safety measures are in place,” said Myszkowski.

Whether or not Snap is able to use its cross-posting option and mobile ad network to offer more people for advertisers to reach, it’s also important for Snap to increase usage among existing users, according to King. To that end, the introductions of an in-app gaming platform and new features for its augmented reality Lenses could lead people to spend more time within the app by giving them more reasons to open the app.

“As they start to court more users and as users increase overall adoption, the more marketers who aren’t using the app are going to think they have to be on Snapchat,” said King.