When MRY had a visit from Snapchat last week, it was the agency’s most-attended event hosted by a platform, even Facebook. It’s no secret why, either.
“It’s hard for Snapchat to have higher consideration in an office full of twentysomethings,” said David Berkowitz, CMO at MRY. “They’re all obsessed with it.”
Snapchat barely even had to bribe the the kids to show up, only serving sandwiches and offering erasers shaped like its ghost logo.
This was Snapchat’s first official visit to MRY for the time-honored ad-sales tradition of the “lunch and learn,” where the agency was shown some of the newer Snapchat ad products, including the new animated lenses and sponsored Discover channels like the one for the James Bond movie “Spectre.”
Everyone knows Snapchat has the cool factor down, but now it has to deliver more than that to win over advertisers with decidedly uncool agency pitch meetings. A year ago, the company was viewed as unfriendly to ads, but it seems to finally recognize the need to build a business that caters to Madison Avenue with more hands-on services.
“A year ago, it was not the easiest to work with. It felt almost at times they weren’t all that interested in courting advertisers, setting price tags very high,” said one creative agency executive.
That’s a sentiment shared by a number of advertising veterans who have seen platforms come and go. They offer Foursquare as a cautionary tale, and Facebook as an example of a company that went from hating ads to doing more than any other platform to accommodate them.
It’s still open as to which Snapchat will be.
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“They have to stop being so precious,” said one top digital media buying executive. “They’ve got one ingredient — lots of traffic — but charging something that is so outrageous cost-wise with very little in the way of infrastructure and feedback for advertisers is a great way to price yourself out of your own market.”
Snapchat started selling ads last year at the initial asking price of $750,000. It since went down to as low as 2 cents a view. It just launched branded lenses that can cost more than half a million dollars,though.
In comparison, Instagram has advanced ad products, integrated with Facebook, and it asks for a $50,000 commitment for the most boutique buying option, according to sources.
Close Snapchat partners said that the company is taking steps to be more ad-facing and responsive. It has sales teams in Los Angeles, New York, Chicago and London.
Snapchat is following what Facebook did before it, building a sales network that can readily connect with agencies and brands.
“They have different brand reps, and they’re basically copying the Facebook, Twitter scenario,” said one agency social media executive. “Facebook and Twitter have these robust teams for sales, creative and reporting needs.”
But to illustrate the size of the disparity and what Snapchat is up against, Facebook has almost 50 people helping a single major brand carry a campaign from concept to execution to reporting.
“Snapchat has, like, one,” the source said.
Still, Snapchat has been saying the right things to advertisers, and it has grown up, agency execs said.
Google veteran Suzanne Strasser Grant, director of Snapchat’s global agency sales and business development, arrived in February and has stepped up her presence with agencies. She comes with years experience as a senior executive at Google, where she was West Coast head of display and video partnerships.
She has emerged as the go-to for top advertisers, which many welcomed because there was a sense that Snapchat needed a person high up with a deep agency background.
Imran Khan, who came from Wall Street, is CEO Evan Spiegel’s top strategist and has also been a face of the company for brands. Khan has made a strength out of not being an advertising veteran, known to open meetings admitting his inexperience in sales.
“Imran is a banker,” said one top digital advertising executive. “Suzanne is full on. She’s been around the block. She was at Google a long time and understand what the market wants.”
Strasser Grant understands that there are a number of features advertisers need before they will commit massive ad budgets to Snapchat. For instance, in one meeting an advertiser raised the point that Snapchat lacks ad performance measurements —a big concern for brands on all platforms — and Strasser Grant was up front about it, admitting its a weak spot.
“Her style is refreshingly candid,” the digital ad exec said. “She really is very open about what the platform can and cannot do.”
What Snapchat can do is reach millennials with video ads for brands that have a hard time connecting with this audience on TV. What it can’t do is super-target messages to specific slices of the audience or help drive sales with a buy button like so many rivals have built.
Snapchat has been too slow to develop all the technology available in mobile advertising — automated buying, targeting and reporting. And it’s still charging a ton. That’s the advantage of being the cool kid, but the cool factor, like CPMs, historically goes in one direction.
Snapchat projects ad revenue of $100 million a year, according to sources, but it splits that money with media partners like BuzzFeed, IGN, ESPN and Hearst who run Discover channels. The media companies and Snapchat strike ad deals and split the revenue.
Snapchat also sells ads in Live Stories, which are dedicated to special events like Fashion Week and specific locations like New York City. There also are Sponsored Lenses, which are animated, cartoonish filters users put on photos that can be branded. Brands like McDonald’s, Verizon, Walmart, Gatorade, Target and Coca-Cola are buying into the platform.
“They’ve got a nice-sized development team, and they are listening to advertisers,” the digital ad exec said. “And they’ve got great products that cater to a segment of young people that just don’t get attention otherwise.”