Snapchat Discussing New Ad Type That's Similar to Live TV
Snapchat seems to have settled on live TV as the ephemeral messaging service's ad model.
Snapchat is talking with marketers about incorporating ads into its live-events product called "Our Story," according to people with knowledge of the discussions.
Snapchat introduced "Our Story" in June as a way to organize people's Snapchat photo and video posts -- called "snaps" -- taken at live events. Each Saturday, for example, Snapchat picks a college football game and collects various snaps taken at the stadium before, during and after the game into a single, chronological "Our Story" that appears within Snapchat users' contact lists. "Our Story" feeds are updated throughout an event and can viewed piecemeal as snaps are added or in full after the event is finished. Within the last week, Snapchat has created Our Stories around the World Series, NBA star LeBron James' return to Cleveland and the New York City marathon.
Snapchat is looking to sell sponsorships of individual "Our Stories" as well as letting advertisers pay to have branded snaps appear within the live-event collections, the people said.
A Snapchat spokeswoman declined to comment.
Snapchat's ad strategy, at least initially, appears to be replicating advertising during live TV events. The service's first ads that debuted last month disappeared after someone exited the app and couldn't be shared with others and were likened to linear TV ads by its advertiser, Universal Pictures. The "Our Story" ads would bear even more obvious similarities given their ties to live events and the fact that while a person can start and stop viewing an "Our Story" they can't fast-forward through the linear feed.
As a hypothetical example of how the "Our Story" ads would work, a brand like Home Depot -- which is the presenting sponsor for ESPN's college football preview show -- could be the presenting sponsor for Snapchat's college football "Our Story" and have the brand's logo appear on the collection's opening title snap. The home-improvement retailer, which sells grills, could also take photos or videos of people barbecuing outside the stadium before the game, add a Home Depot logo and pay for those snaps to appear within the "Our Story" feed. Snapchat is expected to append some kind of labeling denoting the paid-for snaps as ads, the people said.
Snapchat is reportedly worth $10 billion on paper, but the company hadn't made any money until last month when it ran its first ad. To help close the gap between its valuation and revenue, Snapchat seems to be banking on its ability to attract brand advertisers who are directing their money to TV and online video. U.S. advertisers are projected to spend $6 billion on digital video ads this year and up that amount to $12.7 billion in 2018, according to eMarketer estimates.
While the "Our Story" ads are on Snapchat's roadmap, the discussions with marketers are in their early stages, and the timeline for the ads' roll-out is unclear, the people said.