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Snap bolsters ad offerings and incentives to woo advertisers — but will they take?

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Maybe Snap has managed to convince advertisers of its value after all. At least, it’s trying to. Over the last quarter, the social media platform has been lauding incentives and discounts on top of its beefed up ad offering to get buy in from advertisers and ultimately maintain its recent growth.

The social media platform’s ad business has been steadily growing for the most part, reportedly raking in nearly $1.2 billion in Q1 2024, following the $1.36 billion it brought in during Q4 2023 (slightly missing its projections for the quarter) and the $1.19 billion it brought in during Q3 2023.

Snap spent the bulk of last year in the red as advertisers saw the platform as a nice-to-have rather than a must-have media buy. Since then, however, Snap has been slowly crawling back uphill with ad platform improvements to its pixel purchase optimization model, Conversions API and a few ad incentives to bring advertisers back into the fold.

Agency executives say Snap has been working double time over the last quarter to woo advertisers, especially those who paused, slowed down or took a break from spending on Snap since last year.

“Some of the offers I’ve seen in the last quarter have been more substantial than what it usually is, [when it’s] business as usual,” said an agency exec who asked to remain anonymous. Per the exec, Snap is currently offering fairly steep discounts and comps to incentivize advertisers to try new features. (The exec did not disclose specific details. Two other agency execs with whom Digiday spoke for this story also received Snaps discounts, but did not provide specific details.)

The first exec said Snap is currently offering “fairly large comps on trying new features,” and added that their agency had paused ad spend on Snap in 2023, recently reconsidering the platform following the ad offering improvements and incentives. “We’re back on, not necessarily because they gave us comps. It definitely helped, but the performance now is different from what we saw 18 months ago,” the exec said. Snap’s TikTok-like video features has been a selling point for this particular agency, given the short-form video boom, the exec added.

For that agency exec specifically, clients are considering more spend on Snap’s ad offerings. Meanwhile, others who paused their spending on the platform are starting to spend again. But that’s not to say Snap has become a mainstay in media budgets across the board — at least not yet.

According to Digiday research, Snapchat ranked last among social media platforms that received the bulk of marketers’ 2023 ad budgets, trailing behind Reddit and X/Twitter. Even with a new brand marketing campaign, advertisers are still having trouble seeing the platform’s immediate value.

The second agency executive who asked for anonymity said Snap has been making a concerted effort in terms of incentives over the last quarter. However, the exec added, dollars have yet to flow from experimental spend to a proper Snap budget, even with changes to the platform’s ad offerings.

There’s clearly room to grow here and, seemingly, Snap acknowledges that, as it repositions itself as more than a platform for Gen Z to be a brand safe, direct response channel for advertisers. (Take a closer look at how Snapchat is pitching itself as a social media alternative here.)

Incentivizing advertisers isn’t a new phenomenon. Regularly, social media platforms will offer deals and discounts, with the goal of reducing upfront costs often to entice advertisers to participate in a test or activation, said a third anonymous agency executive who has also received Snap’s recent incentives.

A spokesperson for Snap said the platform has always offered deals, especially around new products and important moments throughout the year. While these discounts have been reportedly steeper in the last quarter than they have been historically, according to the first anonymous exec, Snap itself has made dramatic changes to its ad platforms.

“There’s a lot of choices in the marketplace, but we have really been deliberate and focused on investing in our direct response business,” said Patrick Harris, president of the Americas at Snap.

The social media platform has continued to push its 7-0 Pixel Purchase optimization, which has fueled direct response value, per Harris. The platform also recently launched sponsored augmented reality filters, and announced new brand safety solutions for advertisers and other efforts to better position itself to take in more ad dollars.

Brand safety has become a bigger talking point as of late, given the upcoming election and polarized political climate. In response, “Snapchat is no longer grading their own homework and we’ve partnered with the likes of Integral Ad Science [IAS] to make sure that we’re creating opportunities for those advertisers,” Harris said.

When all is said and done, Snap’s new incentives may have been a selling point, but the platform’s beefed-up ad offerings make it a better contender for ad dollars than it has been in the past, according to agency execs. Between the TikTok ban and loss of Google’s third-party cookies (whenever that happens), Snap could end up with a bigger market share.

“As cookies go away and people use different measurement strategies, it’s probably going to become more of a channel you’ll see on plans more often than you have probably in the last couple of years,” said Jeremy Ekes, senior director of client service and strategy at media agency January Digital.

Notably, Snap has also matured in its conversion tracking and back-end improvements, said the third anonymous agency exec. And it’s allowed for better retargeting based on impressions, the exec added.

“​​Because of that ability to retarget, some of the advertisers are really essentially retargeting people that saw that video down the line with a more direct response or product type messaging,” they said.

All in all, Snap is making a play to scoop up a bigger portion of the $82.88 billion U.S. advertisers are expected to shell out on social media advertising, per eMarketer.

“What we’re trying to do is just make sure that we have a host of solutions that all advertisers can use,” said Harris. “We’re trying to expand our advertiser base across all segments.”

https://digiday.com/?p=544613

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