Snapchat is trying to pull off one of the trickiest moves in tech, a commercial explosion that justifies its lofty $22 billion valuation but that also doesn’t dent its impressive user growth and engagement rates.
With its newly announced ad platform, the app has embraced marketing in a way that didn’t seem likely just one year ago as it moves with unusual speed to start making real money. Many platforms — including Facebook, Pinterest and Twitter — have made this advertising transition before it, but Snapchat appears to be on a faster track, looking to sell more ad space than ever while trying to keep users.
Snapchat wasn’t always this committed to advertising. CEO Evan Spiegel famously called out internet ads for being “creepy” and didn’t want to keep profiles on people that could be used to track their behavior. In recent months, however, Snapchat updated its privacy policies to allow for more targeted ads, among other moves that make the platform more ad friendly. Now, it has plans to put ads between the “stories” users view from each other.
“It’s a great opportunity, but it’s also a tipping point that could go either way. If people see a bunch of ads that aren’t relevant, it could drive the masses away. People are so fickle, they don’t care. They’ll move on to something else,” said Chad Martin of VML, referring to the introduction of ads into friends’ Snapchat stories.
Snapchat said this week that its ads API would be up and running soon but didn’t give an exact date. To date, Snapchat has concentrated on making money in Discover, a media experience. That’s a lot easier than putting ads between content users share with each other.
“Snapchat is not going to stuff a bunch of annoying direct-response ads in the app,” said Aaron Goldman, CMO at 4C. “They’re focused on user experience and brand engagement.”
Still, it’s a challenge to maintain the same commitment to creative while also injecting more ads and more sources for those ads. Instagram went from exclusively showing highly stylized, carefully crafted ads to allowing almost any ad once it opened its API last year.
“The bad part is if advertisers jump in there, if people are testing the waters that shouldn’t be and doing crappy creative, there could be a backlash,” Martin said. Martin has worked with brands like Gatorade and Wendy’s on Snapchat campaigns. “If it’s done in the right way, I see it as a positive evolution for the platform.”