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Examining Early Results from the Snapchat Ads API Beta

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Background

Snapchat launched the biddable ads API beta of its Snap Ads for a limited number of advertisers on Oct. 1. The creation of an API-based buying mechanism means that Snapchat will now allow third party technology partners to build media buying systems that integrate directly with its ad platform, enabling direct computer control of media execution. Snap Ads are 100% in-view and skippable video ad units that fall in between the segments of a story:

snap-ads-visual
Visualization of Snap Ads user experience
Source: Snapchat

While Snapchat launched its initial ad offering in 2014, increasing it over time, the media continued to be priced via rate card. With this shift to an auction-based dynamic pricing model for Snap Ads via API, Snapchat is mirroring the pattern followed by Google, Facebook and others in the digital ad space.

Now that the initial testing period is drawing to a close, Snapchat has opened up biddable Snap Ads to all advertisers that meet the minimum spend requirements. Similar to when Instagram and Pinterest launched biddable ads last year, Resolution is working with brands to become early adopters and first movers now that Snapchat is making the transition from fixed-price models to auction-based pricing.

Early Findings:

In the first two months since the Snapchat launch, Resolution has seen promising early results. Apples-to-apples comparisons of CPMs — same demographic targeting parameters and spend volumes — indicate a consistent 10-15% discount imparted to Snap Ads between user stories purchased at auction relative to the same media purchased at rate card prices:

snapchat-ads-api
Comparison of Ads API CPM and Rate Card CPM prices, with Rate Card CPM indexed at 100.
Source: Resolution Media internal data.

Snapchat’s auction marketplace is still in its early days, so it is possible that rates will increase as more advertisers enter the market on the demand side. Perhaps anticipating this, Snapchat has opened up more inventory for auction-based buying, adding placements in Live Stories and Discover on the supply side. Aside from the initial cost benefits of rate reductions relative to the previous rate, the major benefit of dynamic pricing is that it reduces the likelihood of inventory selling out: as demand increases, rates will go up until bidders with the lowest willingness to pay drop out of the auction.

Beyond the shift to the dynamic pricing model, Resolution is excited about the new targeting abilities that Snapchat has rolled out with the Ads API. Previously, advertisers were unable to buy ads based on targeting criteria more elaborate than demographic, gender, device and geography – now advertisers can leverage a wide variety of interest and lifestyle targets to help our clients reach the users most likely to be interested in their products and services. Even more exciting, Snapchat is testing 1:1 matching against CRM data, bringing the platform closer to targeting parity with competitors like Facebook and Twitter.

Through work with other platforms in the space, Resolution has found that the benefits of dynamic pricing and highly customizable targeting are even more formidable when combined: together, they ensure that advertisers are able to both find and deliver the right message to the right person at the right moment on Snapchat.  We recommend that all advertisers with a sufficient target population on the platform begin testing as soon as possible.

Summary

With the testing period for biddable media on Snapchat drawing to a close — Snap Ads are now available to all advertisers — Resolution looks forward to bringing these benefits to a wider variety of clients.  Given the promising early results of the test, Resolution encourages advertisers to explore buying Snap Ads at auction. As this era of biddable media continues, Resolution Media will remain at the forefront to ensure clients gain the benefits of early adoption and experimentation. If you’re interested in learning more, please reach out to your Resolution team.