Ad Age: Snapchat opens private marketplace to sell ads in ESPN, Vice shows

Brief:

Snapchat introduced software tools that let brands buy commercials directly from publishers. The image-messaging app said marketers can book ad space in specific shows in its Discover section, which features content from media companies like ESPN, Vice, BuzzFeed, Hearst and NBCUniversal, according to Ad Age.
The self-serve ad platform is Snapchat's system for premium programmatic advertising, also known as a private marketplace (PMP). The service gives advertisers greater control over ad placements while providing automated digital ad buying.
Snapchat will also offer six-second, unskippable ads through its PMP. The platform created the video ad format to address brand concerns that Snapchat users were skipping past their content with a quick screen tap on a mobile device.

Insight:

Parent company Snap has undertaken a variety of initiatives to be more responsive to brands that have expressed frustration with the platform's inflexibility and limited metrics. Since the company's start in 2011, Snapchat has appealed to younger adults and teens that advertisers often covet. That audience has so far been a key strength for Snapchat, especially as audiences shift their viewing habits away from TV and toward mobile devices and streaming platforms. But Snapchat also faces increased competitive pressures, especially from Facebook-owned Instagram, which has copied many of Snapchat's popular features and has become the top mobile app for influencer marketing with its audience of 1 billion people — more than five times that of Snapchat.

The latest move to build out its PMP could also help Snapchat raise the value of its ad inventory. The app has the lowest prices for ad placements among social media platforms, according to data from 4C, a marketing technology firm and Snapchat partner. Snapchat ads cost an average of $2.95 for every thousand impressions (CPM), compared to $4.20 at Instagram and $5.12 on Facebook's app during Q1 2018. The lower prices were attributed to Snapchat's shift to a programmatic ad platform last year. Snapchat sold 95% of its ads programmatically in the first quarter of 2018 at prices that were 65% less than a year earlier. Snapchat's CPM is expected to rise to closer to $10 in the PMP, Ad Age reported.

Meanwhile, Snap faces greater pressure to show investors that it can be profitable like bigger and more established rivals such as Google and Facebook, the "duopoly" that commands majority of the U.S. digital ad market. While Snapchat's user growth looks steady on an annual basis — rising 15% to 191 million in Q1 2018 from 166 million a year earlier — it's slowed with each quarter. Financial services firm Cowen forecasts that Snapchat will show slim growth of 1 million users when it reports Q2 2018 results on August 7.