Snapchat is selling its new Promoted Story ads, which debuted on Black Friday, for $250,000, according to some advertisers.
The premium price reflects the fact that the format gives brands their own channel inside the media nerve center of Snapchat, and the ad unit goes to every user in the country, for now. The Promoted Story looks like any other media channel from Snapchat Discover partners like BuzzFeed, Hearst, Tastemade and Condé Nast, only the cover image is labeled as an ad and falls under a separate "sponsored" section.
The price is similar to what a brand would pay to take over a publisher's Discover channel for a day, which is when one advertiser fills all the ad placements, according to one Snapchat advertiser, who has been offered the new ad format and spoke on condition of anonymity.
"We like the potential to control the story," the advertiser says. "But we won't know engagement rates until we actually run."
The ads are sold at that flat daily rate, so the actual value of a Promoted Story will vary depending on how many people click on it. The price is the same whether a million people view the whole story or if no people open it.
Some advertisers say the price is steep for such an uncertain proposition. Snapchat is touting the new ad as similar to YouTube's masthead takeover, which gives an advertiser the top of YouTube for a day with no competition for that space. But the Snapchat app is not like YouTube, according to a media agency holding company executive, who spoke on condition of anonymity.
"First, a masthead on mobile is not like a masthead on desktop, from the perspective of being able to break through," the exec says. "And you're depending on people to navigate to that part of Snapchat and engage with the story, but unless you have a great brand moment to promote, it could fall flat."
On Wednesday, Snapchat unveiled a redesign for the entire app, including the Discover section where Promoted Story ads run. It also said that HBO, Beats, Victoria's Secret and Hulu were among the early Promoted Story advertisers in the first week alone.
Snapchat declined to comment for this story.
The app redesign gives some indication as to where Snapchat could evolve the Promoted Story format, according to Kate Hodes, analytics lead on Huge's social team.
The redesign has an algorithm to help people decide the order of content in their feeds. One way for a brand to avoid the algorithm is to pay for placement in the Discover feed, Hodes says. And even, if consumers scroll past the Promoted Story, the cover tile still gets seen.
"If it's still branded and still getting the eyeballs, you get the impression that way," Hodes says. "And Snapchat is stepping up its game proving return on spend for advertiser so they will have more measurements to prove the impact of the ads."
On top of "tile impressions," Snapchat reports other data, including how many people click into a Promoted Story.
For now, the ad is placed nationwide. Snapchat reports 77 million daily users in North America, the majority of those being from the U.S. Promoted Stories are expected to evolve into a more-targeted ad product that can be served through the automated ad platform at lower prices.
That's when the sponsored stories could work well, according to Hodes.
"If they're targeted and being shown to just people who are interested in that brand's channel," Hodes said. "That's a great way to get exposure for the day."