Snapchat Ad Prices Crash

Brief

• Snapchat now has the lowest ad placement prices of all social media platforms according to a report by AdAge. Their ads go for $2.95 per 1000 impressions. Instagram’s go for $4.20 and Facebook’s $5.12.

• The image sharing app shifted to a programmatic platform, a move that may account for the drop. During the first three months of the year, the app sold 95% of their ads on the self-serve platform at 65% costs less than last year’s.

• All of Snapchat’s offering will be available on a self-serve basis.

Insight

The drop in prices of Snapchat is mostly due to strategic changes – automating ad sales. It is also an indication that Snapchat is struggling to get advertisers.
During its last conference call, the company urged investors to trust that the shift to programmatic would increase revenues substantially. This year alone, it has changed how it makes sales in a bid to cut jobs as Snap moved to form personalized and labor-intensive campaigns.

The company also introduced features like Ad Manager tool in a bid to attract more diverse advertisers. The Certified Partners program will bring third-parties and marketers together to create and measure joint campaigns. Trying to appeal to a wider range of creatives, the company also introduced the Lens Studio that makes it simple to create AR content.

The low prices could also point to the fact that the company has few advertisers compared to players like Facebook. Facebook as over six million advertisers fighting for ad space, making the prices go up. Snap does not reveal its number of advertisers but it is probable that they are fewer than Facebook’s which notably, has fewer users compared to Snapchat.

Two years ago, snapchat was charging a maximum of $500 000 to sponsor an animated filter or lens that changes people’s faces. Each video ad went for $750 000. Most marketers thought those prices to be too high so the company started offering discounts for small companies.

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