From the Blog

Why advertising on Snapchat isn't about to disappear

This is truly a golden age for TV…and for TV advertising. Over roughly the last decade, there has been more innovation in how advertisers use television than at any other point in history. Only now are some of the most exciting developments coming fully into focus.

One of the most intriguing marketing developments of 2015 is the rapid rise of a new broadcast-scale video platform for advertisers. No – I’m not talking about YouTube, Hulu, Amazon Prime or Netflix. I’m talking about Snapchat.

I’m sure at this point, many are raising an eyebrow at this claim. After all, Snapchat had inauspicious beginnings. For those who don’t know the service, it was conceived in 2011 by a group of Stanford undergrads as a way for them to “safely” send risqué pictures and messages to other users. The service automatically deleted the content after a brief period of time – so Snapchat users felt reasonably secure that their images and words wouldn’t wind up online for the public to view forever.

Over time, the service evolved into a bona-fide content delivery system. By 2012 – about 18 months after it was founded – Snapchat was growing exponentially, and outlining plans to expand into video sharing and content monetization. Huge investments from the capital community and even Alibaba.com followed, which further legitimized the company. High profile Silicon Valley executives were brought in to manage the growth and plot its future.

This year, Snapchat opened up its “Discover” series to advertisers. To say that the response has been tremendous is to put it mildly. Right now, ads are reportedly being sold at astronomical CPMs of $100 or more. That’s not just higher than most other online video ad products, that’s more than double what some video ad products can charge, and many times more than publishers can command for banner ads.

While this video product is wildly overpriced right now, just as Hulu was when it first started selling ad inventory, Snapchat is able to incite such a fever with advertisers because it is delivering something that no other online video platform can claim: broadcast scale.

Consider the most popular telecasts from broadcast and cable TV. In the top tier, you’re typically looking at an average of 15–23 million viewers. Last year, if you were willing to pay up for, say, “NCIS,” the show got you more than 20 million viewers on average. That delivery obliterates any view total you’d be able to get for your ads on a streaming site such as Hulu or another publisher.

But now, by advertising on Snapchat’s largest reach “programs,” marketers can hit the same number of viewers as they would by running on the highest rated TV programs. They might even be able to reach more – especially if they’re targeting the 18-24 age group. For years, it’s been all about smaller niches and precise targeting. But now, we are seeing the possibilities of scale and mass reach in video. And importantly, firms are starting to lean into that expanded role.

This will all continue. It may even speed up. Snapchat has already demonstrated that different story types – big news items, cultural movements and sporting events – can all drive massive viewership. And over time I’d think that delivery may actually grow. Snapchat certainly isn’t alone in its ambition. Surely Amazon and Netflix are looking at the success here and planning their own strategies to deliver content on this scale. Facebook and Apple likely aren’t far behind, either.

For advertisers, it is truly an exciting time. And as a TV advertiser, we at Eicoff continue to look at all avenues that can deliver results for our clients. So while it may not be right for many clients and their goals, Snapchat - with its TV-size reach - is definitely worth a look. 

Sources:

Nielsen, 2015

WSJ, 2015

Slate, 2015

See more posts »