Blog Post By: Brad Goldberg

Snapchat: The New Frontier (Of Cost Efficiency?)

The time to buy Snapchat is now, and I’m not talking about their stock (I’m bullish on that too, but that’s a different story). I’m talking about Snap Ads: Snapchat’s native ad units.

I have written about Snap Ads before and the unique creative opportunity they present to brands looking for new ways to engage with their audience (including how our HYFN8 platform makes executing and optimizing them a snap 😜 ). But that was all before we really had a chance to dig in and get a better look under the hood on how this new channel would perform in terms of measurable results.

We are still in the nascent days of Snap Ads, and the metrics are promising. Based on HYFN’s data from early-adopting advertisers, we are seeing incredibly efficient CPMs, in some cases as low as $2.25, with cost per swipe up (Snap’s version of CPC) coming in as low as $0.10 with the right mix of campaign elements. These are below the benchmarks reported by AdEspresso for Facebook data in 2016 where they measured the average CPM in Q3 at $7.34 and the average CPC at $0.27 across all objectives. The caveat of course is that they are subject to the objective of the campaign, target audience and creative execution. But it does indicate Snapchat’s ability to aid you in reaching your audience at scale and efficiency.

Even though current news stories are focused on Snapchat’s user growth rate, let’s not forget about the massive existing audience and the level of engagement they drive: Snapchat still has over 166 million daily active users (and growing) that spend more than 30 minutes per day in the app, and with 65 million daily active users reported in the US and Canada, Snapchat has massive reach in the world’s largest ad market (for context, that’s over 1/3 the daily size of Facebook in the region). Of those current users, 42% are above the age of 25, and more than 50% of new users joining Snapchat in the US are 25+. On top of that, nearly ⅓ of adult Snapchatters (31%) are parents. The inventory is there and so are your target customers.

While these numbers may not be that drastic to some, it is important to note that the auction and bidding algorithms are in early stages and will continue to improve. Snap, like other digital advertising marketplaces before it, first launched its ads ecosystem with CPM bidding but has quickly moved to add in goal-based bidding options to drive results that advertisers need, optimizing toward swipe-ups, mobile app installs and video views. This gives marketers more control over their costs and guides Snap’s ad delivery mechanism to find users that are most likely to take the intended action of the campaign.

As those algorithms gather and analyze more data they will only get better at supplying advertisers with their campaign objectives. On the other side of the equation, as more advertisers enter the marketplace the demand will start to grow. That is why the time to jump in and test the waters is now, before it gets crowded and your competitors hold share of voice. Similar to the early days of Facebook’s ad auction, advertisers that were early adopters and took advantage of the opportunity and learned the nuances of the channel were able to find immense success (just don’t do what did with all that success), while others were left in the dust and are still trying to figure this whole social thing out.

There still seems to be a notion that Snapchat is expensive, but with CPMs in the $2.50 range, swipe-ups in the $0.50 range, and a minimum daily budget of $100, that could not be further from the truth. Snap is now starting to open the doors to advertisers with smaller budgets and giving them the tools to create basic Snap Ads. As those advertisers see success and want to really grow their campaign budgets and manage their ads at scale, partners like HYFN are working to push things even further, building powerful technology on top of Snapchat’s API — ready, willing and able to drive results.

These early days of the Snapchat ad auction marketplace should be seen as an opportunity to learn a new channel and measure the impact it has on your overall marketing initiatives. You can reach your target audience at scale without having to break the bank, optimize to specific campaign goals and measure real results.

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