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article imageSnapchat offering discounts to lure small businesses to run ads

By Business Insider     Aug 23, 2017 in Business
According to one ad agency executive, Snap is offering to reimburse the recut cost up to the greater of $1,500 or one percent of the overall budget where the spend is over $40,000.
-Snapchat is offering discounts and incentives to help brands recut their videos into the vertical format.
-The incentives appear to be targeted at small brands and businesses, which in addition to having smaller media budgets, generally have proportionally smaller production budgets as well.
Snap is hoping to recut its way to revenue growth.
The platform is offering discounts and incentives for creative services, specifically helping brands recut horizontal ads into its signature vertical format, multiple ad agency executives told Business Insider. The incentives were made available for advertisers running Snap Ads, its video ads, in the second and third quarter.
"Basically, they are providing incentives in an effort to eliminate the friction between horizontal ad assets and its vertical format, recutting them so that they can run on Snap," the executive said.
Another media agency executive at a holding company said that Snapchat had offered to cut assets for the agency’s clients if the clients were unwilling to do campaigns on Snapchat "because they didn’t have any vertical video." But no formal dollar amount or spend threshold had been communicated, according to the executive.
A Snapchat creative partner confirmed that Snapchat "is more than happy to make ads for brands above a certain threshold for free," adding that it either does that by tapping into its ad design team or through a third party vendor like itself. "All brands have to do is provide whatever media they have, whether that’s creative from a TV spot, a raw clip or a YouTube videos."
Snapchat declined to comment for the story.
This is not the first time that Snapchat, or even its competitors like Instagram and Facebook, have offered such incentives. Incentive programs are a regular product and sales strategy for platforms, with the idea being to get brands to try new formats out and hopefully get them to spend more eventually. When an auto brand wanted to test video ads on Instagram Stories and created an ad that needed to be resized, for instance, Instagram absorbed the additional cost of editing for the brand.
But in Snapchat’s case, the incentives come as it is looking to boost its ad revenue, on the heels of its dismal performance in its second quarterly earnings as a public company earlier this month.
"The objective is to get brands who may be on the fence to move quickly and spend more," said the executive with the financial services client. "They are trying to eliminate any friction they can so advertisers can try it out and feel more confident."
Specifically, the incentives appear to be targeted at small brands and businesses. Facebook has seen tremendous growth in its ad revenue coming from small businesses and Snapchat seems to be taking a page out of its playbook. It has earnestly tried to appeal to smaller brands and businesses in recent months.
Snapchat has introduced a self-serve ad buying platform as well as a new creative tool called Snapchat Publisher, for example, which lets advertisers of all sizes create full screen video ads in less than two minutes. So once Snapchat gets new advertisers on board to try advertising on it through these incentives, it can then easily point them in the direction of the self-serve and creative publisher tools.
"This is aimed at growing buying on Snapchat by small business advertisers, because in addition to having smaller media budgets, they generally have proportionally smaller production budgets," said Kieley Taylor, head of paid social at WPP’s GroupM. "This incentive appears built to entice trials of Snapchat with better suited ads without incurring additional non-working costs."
It also encourages broader adoption of the vertical video format. Snapchat has pioneered the vertical video format, and the new Publisher tool makes it even easier for marketers to adopt it. But advertisers have not exactly jumped at the format.
"This makes sense as a way to get new advertisers over the stumbling block of vertical video," said Noah Mallin, head of media agency MEC’s content arm, Wavemaker. "The issue of format laziness still persists for some advertisers."
To be sure, not all agency executives interviewed for this story have received the offers. MEC’s Mallin said that the agency hadn’t received any such offers, "probably because we have a fair number of clients on the platform already." GroupM’s Taylor added that she hadn’t "heard that specifically floated." This is also because Snap has several partnership deals with agencies at the holding company level.
"We have a large-scale partnership deal with Snap that includes custom pricing, so they often don't share information about the promotions they are running with other advertisers," Noah King, VP and group director of social media at Socialyse, told Business Insider. "For large agencies and holding companies, the pricing, support and ad offerings are not the same as the public offering to small and medium businesses who are buying self-serve."
This article was originally published on Business Insider. Copyright 2017.
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