Snapchat is no doubt a popular app these days, with thousands of users engaging in a variety of conversations and sharing million of pictures on a daily basis. That has the company believing that it has a strong advertising model in place, one that could bring a number of partners into the fold. However, the process isn’t quite going over as smoothly as planned…
Adweek is reporting that the company is asking brands for $750,000 on a daily basis for its new ads. This is a little steep, especially considering that the ads won’t be on the screen permanently, instead just flashing between pictures being posted on users’ feeds. As a result, some companies are questioning the worth of such a program.
The company just started running ads late last year, starting with Universal Pictures’ Ouija horror film. It’s met with some success, but it’s left the company feeling overconfident, feeling as if it’s on the same level as a TV-style commercial space with access to millions of users.
The program has drawn in McDonald’s, Samsung, Electronic Arts and other companies, with quick videos and photos being shown in-between messages. However, with the new asking rate, some are wondering if it’s worth sticking around.
“They (Snapchat) have minimums, and they are very firm on them,” one agency executive explained when it came to the company’s approach. “From a monetization perspective, they are looking for fewer, bigger, better.”
While there’s no doubt that the ads would have huge outreach with the 100 million monthly users on the app, it’s still quite a risk, due to the lack of sophistication and limited outreach capabilities. There’s also no way to really see the effectiveness of an ad based on numbers, with a lack of age breakouts, according to the executive. “It’s very hard for marketers to get their hands around advertising that is so ephemeral,” they explained.
Universal has stated that Snapchat was a very effective part of its advertising, but the question of price still comes into play. A top executive for another major brand stated, “I’m a big fan of Snapchat, but they are going to market with rates that are significantly higher than what’s competitive out there. It is difficult to go forward with a deal with Snapchat at the prices they are quoting.”
The rate is also quite higher than what YouTube charges for its daily ads, going at around $500,000 a pop – and that’s a more effective means of advertising, with room for video aplenty compared to static ads that disappear.
“I don’t think Snapchat can get what it’s asking,” said the exec. “They’re going to have to negotiate down.”
Snapchat had no comment on the new ad rates.