Adidas sees 52% gain in ROAS from Snapchat's e-commerce ads

Brief:

Adidas boosted its return on advertising spending (ROAS) by 52% in a test of Snapchat's e-commerce ad format, which the image-messaging app now offers worldwide. The athletic apparel brand ran Snapchat's dynamic product ads in the U.K., Germany, France and the Netherlands, TechCrunch reported.
Topshop and Farfetch were also among the retailers that piloted the shopping offering before this week's international expansion. Topshop experienced ROAS that was four times its U.K. benchmark within two weeks, and plans to expand to other markets, Charged reported.
Snapchat last year introduced the dynamic ads in the U.S., letting marketers automatically create ads and reach target audiences in real-time. The format selects from the product catalogs of advertisers and shows them to Snapchat users based on their interests while also providing a direct sales channel for mobile marketers.

Insight:

Snapchat's global rollout of dynamic product ads is a strong indication that the format is providing returns for marketers looking to drive mobile commerce sales, including brands like Adidas and Topshop. The international expansion arrives as shopper habits shift more quickly than usual, while platforms and marketers rush to meet those trends.

Parent company Snap is opening the availability of the ads amid a surge in e-commerce sales to homebound consumers during the COVID-19 pandemic. The European Union found that the effect of lockdowns on retailers varied by country, with 64% of its member states reporting that brick-and-mortar stores had adopted other ways to deliver and sell products, including online marketing. E-commerce is likely to remain a key sales channel for brands and retailers even as consumers start to feel more comfortable about visiting stores that are gradually reopening after months of lockdowns.

For Snap, the expansion of dynamic products ads to other countries can support revenue gains that have outpaced its U.S. growth. European revenue jumped 61% in Q1 from a year earlier, compared with 40% in North America and 49% in the rest of the world, per its most recent quarterly report. Its European daily active users grew 14% to 70 million, while the North American user base expanded 10% to 88 million. However, the strongest growth was seen in other regions, with a 45% jump to 71 million users. Snap has significant potential to expand that overseas audience and boost ad revenue with formats like its dynamic product ads.

When Snapchat rolled out dynamic product ads in the U.S. last fall, the platform added a feature that digital media rivals like Google and Facebook already had. At that time, increasing ad effectiveness was seen as a way to help Snapchat expand its influence over household purchase decisions by reaching Gen Z users. Snap has claimed that it reaches 90% of 13- to 24-year-olds, making it more appealing to brands that want to cultivate their next generation of loyal consumers and also creators who seek audiences that are less present on traditional media channels like TV.

Adidas has been an early adopter of Snapchat's features, partnering for an augmented reality try-on lens back in 2018 and sponsoring the first Snapchat video game that lets mobile users buy products directly in 2019. The company has also worked to sidestep social platforms by letting shoppers virtually try on shoes in its iOS app.