Brief:

• Snap began tests of an e-commerce function in several Snapchat Discover publisher channels, unnamed sources told Digiday. The option lets users swipe up to buy products from a virtual storefront inside Discover that also offers Snapchat-branded merchandise like sweatshirts and hats. A source told Digiday that Snap isn't currently taking a cut of the sales revenue.
• Snap didn't comment on its plans but has previously said commerce on the platform is a priority, as seen with previous deals with brands like Nike to sell products. Two publishers on Discover told Digiday Snap has asked them about commerce to gauge their interest.
• Meanwhile, Snapchat reached a deal to reconcile with publishers last month and let them post branded content on the app, per Ad Age. Previously, publishers couldn't create their ads on Discover.

Insight:

While Snapchat's parent company hands off a bigger part of its ad inventory to programmatic sales, it's also working to expand its content offerings and appeasing publishers, as seen with this week's Publisher Summit hosted by the company in New York. The image-messaging app that serves 187 million users is targeting publishers as they cope with a shrinking audience following Facebook's change to its News Feed earlier this year to emphasize more engaging user-generated posts and less passively consumed publisher content.

In addition to testing out commerce functions to generate sales for publishers, Snap has developed branded content guidelines for Discover for the first time, per Digiday. The guidelines let publishers distribute branded videos as Snap Ads units. Additional guidelines say these Snap Ads may be thematically and aesthetically aligned to adjacent editorial content. Snap Ads containing branded content will be labeled as an "Ad" like all other Snap Ads for greater transparency to users, though additional disclosure may be necessary, depending on what an advertiser's lawyer advises.

The changes are likely to help publishers find additional ways to reach audiences and monetize their content. Snap last year paid more than $100 million to Discover content providers, per its annual report. A Discover publisher told Digiday that its Snap-related revenues jumped more than 50% in 2017 from the prior year. In addition, native advertising is growing as brands seek ways avoid ad blockers and integrate their message with nearby content.