Since Snapchat released its advanced Pixel targeting capabilities to advertisers in June, some direct-to-consumer companies say they are seeing up to a 50 percent lower cost-per-acquisition since applying the Pixel, prompting some to shift spending from Facebook and Instagram.
DTC company Lounge Underwear used to pay between $65 and $80 to acquire each new customer in the U.S. on Snapchat. After applying Snapchat’s Pixel, the costs dropped between $26 and $40, said Josh Elliott, head of marketing at Lounge Underwear. Seasonal subscription box FabFitFun, one of the first beta partners when Snapchat introduced the Pixel to select advertisers, saw 36 percent lower CPAs at the end of September, said Alyssa Perry, senior director of Marketing at FabFitFun. Acne-treatment seller Curology began using the Pixel in June and is now seeing up to 40 percent lower CPAs depending on the campaign, said Fabian Seelbach, svp of marketing at Curology.
Marketers say two ways the Pixel is driving decreased CPAs is its ability to bid on conversions rather than swipes, which allowed marketers to serve ads to people who are more likely to convert rather than ones just more likely to swipe; and the power to retarget Snapchat users that visit their websites.
“Bidding on swipes can work great for top-of-funnel brand awareness campaigns, but there’s so much more instant value gained when you can bid on conversions that take place on your own website,” said Manbir Sodhia, head of digital at The Pill Club, a DTC birth control company, which has seen a 45 percent decrease in CPAs across Snapchat placements since applying the Pixel.
Kari Skitka, vp of growth marketing at Function of Beauty, a DTC company that sells shampoo and conditioner, said the company used to use Google LastClick, which only tracks when a user swipes up on an ad in Snapchat. With the Pixel, it can see which users visited its website or added a product to a cart from within the Snapchat app. It can then serve them ads when they are most likely to convert. Skitka said the Pixel has decreased its CPAs by 100 percent.
The Pixel is just the latest way Snapchat has been trying to improve its ad offerings compared to bigger, rival platforms. DTC brands have already been cutting their Facebook spend since its ad prices have increased. Seeing low CPAs on Snapchat, some DTC advertisers are shifting spending from Facebook for prospective new customers as well. While every brand cares about a decrease in CPAs, it’s especially important for DTC companies whose business is driven by getting people to their sites. “In the e-commerce world, and especially in the DTC world, we require visibility into the full funnel,” said Sodhia.
Lounge Underwear plans to increase its Snapchat budget by 400 percent in November after shifting budget from Facebook, said Elliott, who wouldn’t give specific figures. Elliott said Lounge Underwear spends 80 percent less on Snapchat than on Facebook or Instagram, but has seen a 450 percent increase in website traffic from Snapchat compared to Facebook.
Similarly, FabFitFun has increased its Snapchat spend sevenfold since seeing lower CPAs from the Pixel, said Perry, although she would not give numbers. Curology continues to move money from Facebook, and Snapchat’s Pixel is helping that along, said Seelbach.
“It’s been a rough six months on Facebook,” said Skitka, who said Function of Beauty is increasing its spend on Snapchat tenfold. “It’s been nice to have another social channel take some of the pressure off.”
Marketers say Snapchat’s Pixel targeting still has a long way to go compared to Facebook’s Custom Audiences, though. Through Facebook’s Pixel, for instance, advertisers can segment website visitors by the frequency or amount of actions taken. When a visitor to a website views three or more items on sale, an advertiser can segment them into a high-intent list.
“Snapchat is really in its infancy in terms of the Pixel,” said Elliott, who added that he expects Snapchat to add all of Facebook’s capabilities, like Custom Audiences, to its Pixel eventually.