POV: Snapchat Dynamic Ads

Background:

Snapchat is rolling out Dynamic Ads, a product that automatically creates ads and target audiences in real-time, to help compete for digital ad dollars and attract more retail, ecommerce and direct-to-consumer brands to its platform.

Details and Implications:

Shapchat’s Dynamic Ads, which has been in beta testing for more than a year, allows marketers to create ads on the fly and as the ads connect directly to an advertiser’s product catalogue, they’re always up-to-date, which removes the need to manually advertise each product individually. The ads can also be automatically created and targeted based on a Snapchat user’s past behavior.

There will be a variety of made-for-mobile templates and designs enabling brands to find visually appealing ways to showcase their products. Snapchat pointed to the simplicity of the creation process, saying that advertisers do not have to manually create these ads, instead merely syncing a catalogue, determining their target audience and letting the messaging application’s system handle the rest, in real-time.

The ability to tap into entire catalogues will give brands a larger pool of ads to choose from, which Snapchat sees as improving the experience for end-users while boosting return on investment for advertisers at the same time.

Snapchat said it sees dynamic ads as having the most appeal for retail, ecommerce and direct-to-consumer brands but all advertisers in the US will be able to use the dynamic ad platform immediately to target the US audience. A global rollout will follow in the coming months.

Snapchat has offered the self-serving Ads Manager for the last two years but the feature didn’t automatically create and target ads in the same way the new dynamic ads product works.

In many ways this is catch-up for Snap, with competitors Google, Facebook, Instagram and Pinterest already offering a similar service. But Snapchat believes its late entry will not impact its ability to benefit as it has such a strong millennial audience that is desirable to advertisers. Snapchat, said it reaches more than 90% of 13 to 24-year-olds in the U.S. and its user base is highly engaged with the app, which gives advertisers more opportunity to reach them.

The announcement comes less than a week before Snapchat parent Snap announces its third-quarter results. The company’s ad revenue is still largely dependent on the US market and Snap remains a small player in the global digital ad market with 0.5% revenue share, compared with Google at 32% and Facebook at 21%, according to eMarketer.

Summary:

Snapchat is often just seen as a space for brand campaigns, so this is a significant step in opening up opportunities for advertisers looking to drive sales through a platform that returned to user growth this summer. With products like Google’s shopping ads and Facebook’s dynamic product ads now a consistent part of media plans for these types of advertisers, this gives them a reason to consider Snapchat as part of their strategies. However, Snapchat will need to demonstrate the effectiveness of these dynamic units in driving performance at scale if it wants to make progress in the ecommerce space.  

Further Reading:
Campaign | Adweek | TechCrunch | Reuters