Brief:

• Snap, the parent company of image-messaging app Snapchat that has 173 million users, is said to have told advertisers and content producers of a plan to put more programmatic ads within Snapchat shows, Digiday reported. Programmatic media buying uses software to match up buyers and sellers of ad space without much human involvement.
• Snapchat is struggling to find sponsors to buy ad insertions in its video programming after being hesitant to run ads bought at auction, unnamed sources told Digiday. But this suppressed sales, compelling the company to sell programmatic ads in its video programming.
• Digiday’s review of six shows available on Snapchat on Oct. 20 found that three of the six shows had no commercials. CNN’s “The Update,” NBA’s “Versus” and E! News’ “The Rundown” were ad-free. Ads from Wendy’s, TD Bank and Tresemme were seen on NBC’s “Stay Tuned,” Barstool Sports’ “5th Year” and B17 Entertainment’s “Nail the Look.”

Insight:

Opening up Snapchat shows to programmatic buys could help Snap drive ad revenues but it also runs the risk of having a negative impact on the platform's premium positioning as programmatic typically comes with less control over the ads that appear.

Because Snap doesn’t provide content producers with advance money to make shows for its platform, they bear the risk of not finding sponsorship support. Snap shares half of the ad revenue with its media partners, which may be acceptable to major media companies that are experimenting with Snapchat’s reach among younger audiences. Snap clearly needs to figure out a strategy for selling sponsorships in its video programming while enticing content producers to take a risk on the platform.

Snap has mostly sold ad inventory for Snapchat shows directly, even working with media giants such as NBC Universal and Viacom to sell ads in shows produced by those companies. NBC Universal invested $500 million in Snap as the company went public in March. Snapchat shows typically have three to four ad breaks in each episode, but the company appears to have had difficulty filling those spots. 

That’s not to say that Snapchat Shows can’t find an audience. One Snapchat show had total views of 50 million viewers, but Snap struggled to sell the ad inventory because of inexperience in selling video content and the lack of viewership data, a source told Digiday. Snap’s media partner took the lead on selling ads for the second season of the show, and any unsold inventory will be filled programmatically.