In an alternate universe, Snapchat would have become a part of Facebook when the social network reportedly tried to buy the mobile app for $3 billion in 2013. Instead Snapchat has set its sights on recreating Facebook's success, and its employees have been discussing with people outside the company how it plans to do just that.
Snapchat has several plans in place to build its ad business in ways that would emulate Facebook's. According to several people with knowledge of the company's plans, those include improved ad targeting based on what content people are checking out in Snapchat's Discover publisher portal, as well as the sites they're browsing and searches they're conducting outside of Snapchat.
The company is also pursuing the ability for brands to fact-check whether their ads were seen. And it has pending hires of sales and measurement bosses.
In conversations with people outside the company, Snapchat execs have even floated the possibility of redesigning its Stories tab to into a algorithmically ranked feed a la Facebook's news feed that would be ordered based on the stories -- collections of posts, or "snaps," publicly uploaded in the last 24 hours -- that individuals are most likely to want to check out based on their past viewing behavior.
A Snapchat spokeswoman declined to comment.
Each of those moves appears to borrow straight from Facebook's playbook for making advertisers comfortable opening their wallets and keeping them open. Improved ad targeting to help brands pinpoint exactly who they want to advertise against? Check. Independent verification that brands are getting what they paid for? Check. Execs dedicated to working with brands and making sure they get what they paid for? Check. A content section that accommodates paid prioritization? Check.
Snapchat plans to let advertisers target ads within publishers' channels in the app's Discover publisher portal based on the specific content people are checking out within Discover, according to several people briefed on the company's plans. Snapchat has said it plans to roll out this interest-based targeting in the second quarter of 2016, the people said.
Interest-based targeting would improve brands' abilities to pinpoint their ads within Discover because it will aim ads based on the actual content people are checking out, as opposed targeting the ads based on the channels people are checking out. Snapchat will determine audiences' interests based on the articles, videos and other content people check out in Discover. For example, if someone is reading a fashion-related article in CNN's Discover channel, that person would be added to an audience segment of people interested in fashion.
Tracking users beyond Snapchat
Snapchat is also looking to eventually let brands target ads based on people's off-Snapchat web browsing and search behavior, according to one person with knowledge of the matter. That targeting option is connected to the company's plan to develop a way for third-party advertising and marketing technology companies to plug into Snapchat via an application programming interface that would let the companies develop computer programs to programmatically buy Snapchat ads. Google, Facebook and Twitter offer similar tools for ad-tech developers. Digiday had previously reported on Snapchat's plan to develop an advertising API.
The addition of new ad-targeting options should lead to increases in the price of the ads that Snapchat and, in the case of the interest-targeted Discover ads, Discover publishers are able to sell within the app. None of the people Ad Age spoke to were told of any specific price increases, but typically the more targeted an ad is, the costlier it is, because advertisers are willing to pay more money when they know they can be more efficient with who is shown their ads.
Snapchat is in the process of hiring a global head of sales, according to several people with knowledge of the matter based on conversations with Snapchat execs. Snapchat CEO Evan Spiegel is said to have met with former Fox Interactive Media, Google and Yahoo exec Michael Barrett regarding the position. But it's unclear whether the longtime media vet, who most recently served as CEO of mobile ad network Millennial Media (now owned by Verizon's AOL), was in the running for the job or being consulted about who should be. Heading into the holidays, Snapchat is said to have narrowed the field to three candidates whose names could not be learned. Snapchat Chief Strategy Officer Imran Khan has been running the company's sales organization on an interim basis after Snapchat's former revenue boss Mike Randall left the company in January 2015, according to Re/code.
In addition to hiring a revenue head, Snapchat is said to also be looking to appoint a head of measurement. That position and its domain is increasingly important to the company as it looks to woo advertisers that Facebook has already won over with its ability to track their ads' performance.
To that end, Snapchat is working with analytics firm Moat so that the measurement company can independently fact-check how many people are seeing brands' Snapchat ads for a period of time longer than what Snapchat counts as a view, according to brand and agency execs briefed on the matter. Snapchat counts a view once an ad appears on someone's screen, even if that person taps the screen to skip past the ad in less than a second. Digiday had reported on Tuesday that Snapchat was in discussions to sign such a deal with Moat but that the deal has not been finalized, which the people who spoke to Ad Age confirmed. Moat CEO Jonah Goodhart declined to comment.
Having Moat on board to independently verify ads' viewability would be an important step for Snapchat as it looks to take a bigger slice of advertisers' budgets on a consistent basis. Given that Snapchat's ad business is less than 18 months old, many advertisers have adopted a test-and-learn strategy for their Snapchat campaigns. But if Snapchat can prove the effectiveness of those ads and have a third-party company verify that effectiveness, then advertisers are likely to be more comfortable spending money on its ads.
Without allowing ad viewability verification, Snapchat may risk advertisers pulling back their budgets as they did with Facebook and Google's YouTube when those services resisted allowing third-party ad viewability verification. Both have since relented and signed deals with Moat.
Virtuous circle
Snapchat execs and employees have also discussed the possibility of an algorithmically ranked Stories tab with people outside the company, including agency execs. Snapchat's Stories tab currently lists stories in reverse-chronological order based on how recently they were updated. It's unclear if the company has committed to exploring that development or has only been toying with the idea as one potential way to redesign the section, which lists all the stories by the people that users follow on Snapchat. It's also unclear whether the redesigned feed would combine individual users' stories and the Live and Local Stories that Snapchat curates from people's posts during live events, like the College Football Championship game or Macy's Thanksgiving Day Parade, or in certain geographic regions, like cities and college campuses, into a single algorithmic feed. It could keep them separate and only apply the algorithm to the individual stories now listed under the tab's Recent Updates section.
Facebook's algorithmically ranked news feed is credited as a major reason for the company's ability to get more than a billion people checking it daily, and has become one of the most valuable pieces of ad-supported digital real estate. Twitter has been pressured to adopt an algorithmically ranked content feed of its own.
Stories has become a hit product for Snapchat, likely contributing many of the more than 7 billion daily video views that Bloomberg has reported Snapchat generates each day. While some of the stories being watched may be posted by people's friends, however, increasingly celebrities, media companies and brands are posting stories as well, along with the growing number of Live and Local Stories that Snapchat curates. A feed that prioritizes stories someone could help Snapchat audiences from feeling overwhelmed by a flooded feed. Eliminating the negative side effects to following a lot of people could, in turn, lead to its audience following more people, which could keep them using the app for longer periods of time and checking it more regularly. That's important, considering that Facebook claims 1 out of every 5 minutes that Americans spend on their phones is spent in either Facebook or Facebook-owned Instagram.
An algorithmically ranked Stories feed could also provide a new moneymaking scheme for Snapchat that would be familiar to brands already paying to appear in Facebook's news feed. Snapchat execs and employees have not said whether an algorithmically ranked Stories feed would lead to paid placements. But that would be one reason for an ad-supported business like Snapchat to adopt such a feed. And it could herald the return of ads within Snapchat's Stories section. Introduced in October 2014 before being sidelined in April 2015, the company's original ad format offered brands the ability to pay to place links to 10-second video ads within the previous version of the Stories tab.
Of course, for Snapchat to let brands to promote their stories within a redesigned Stories feed, it would need to get more brands creating stories to post to the app, which would appear to be the job of the new sales boss.
