Snapchat expands 3 e-commerce, ad targeting features to all marketers

Brief:

Snapchat is rolling out three features to support the e-commerce efforts of marketers and brands. The image-sharing app next month will expand self-serve shoppable ads, which are now called Collection Ads, to all advertisers after testing the format since June, according to a company blog post.
EBay, Guess and Wish were part of the Collection Ads pilot. eBay saw a five-times higher engagement rate with Collection Ads compared to standard Snap Ads for the same products, and Wish saw a 17-times increase, according to Adweek.
Snap said advertisers also can now post product catalogs on Snapchat to help create ads in different formats. The company also said Snapchat pixel, which uses tiny downloaded graphic files to track website visits and digital ad impressions, will have better targeting for individual web pages that Snapchat users view. Finally, Snap added more than 30 company-certified partner agencies to help advertisers use the new ad formats and features.

Insight:

Snap has had a busy month of announcements that highlight the company's focus on improving its e-commerce and ad-tracking features. The shoppable Collection Ads look particularly promising, with higher engagement rates that could have brands considering the format and advertising on Snapchat. Snapchat's new product catalogs, a format that companies like Facebook also use, let advertisers upload thousands of versions of their product feeds to help automate the creation of Story ads, Snap ads and shoppable ads. The feature should help give advertisers more flexibility and control of the ads posted on Snapchat, which is particularly important given the platform's shift to programmatic advertising. Likewise, the improved Snapchat pixel can help brands better target consumers.

As part of its e-commerce push, Snap this week announced a visual search feature that lets Snapchat users use the app's camera to search for items on Amazon. These new shopping and ad targeting features follow the April addition of shoppable AR lenses, which use augmented reality technology to overlay digital images on selfies and photos. Adidas, beauty supplier Coty, gaming company King and STX Entertainment were among the first advertisers to use the shoppable AR format, which Snapchat last month offered to top creators to help them generate revenue from their public posts.

The new features come as eMarketer revised the company's ad revenue forecast, down 36% to $662.1 million. Despite more marketers using the platform, automated ad buying has pushed down prices for its inventory. Automated ad buying, which made up 95% of the company's ad sales in Q1 2018, led to a 65% drop in its ad prices from a year earlier, per 4C data cited by Ad Age. The shift to programmatic ads was seen as necessary for the company to expand its reach among a wider group of advertisers instead of relying on a sales team to push expensive, customized campaigns. The company in March also cut 100 employees mostly in advertising and sales as part of a broader strategic review, per Bloomberg.

Snapchat's new ad products could help boost user engagement as the company seeks to maintain the interest of advertisers who want an alternative to the so-called duopoly of Facebook and Google, which together control 58% of the U.S. digital ad spending. Amazon has emerged as the third-biggest ad platform with an estimated 4% share of U.S. digital ad revenue this year. Snapchat has 0.6% of the digital ad market, and 0.9% of the mobile ad market in the United States, per eMarketer. Snapchat's key strength is in reaching younger audiences, including teenagers who use the app to chat with friends and share Stories.