Brief:

• Snap started testing an ad format that shows a commercial before the first show that people watch each day on Snapchat. AT&T is among the advertisers that have tested the photo-messaging app's "first commercial" feature, per an announcement shared with Mobile Marketer.
• The non-skippable ad insertions appear before other commercials in video programming in Snapchat, including its Snap Originals series and shows that appear in the app's Discover section. The company also expanded Snap Select, its program for buying six-second ads on Discover, to five bundles that let marketers place ads among sports, entertainment, beauty, lifestyle and news programming.
• Snapchat also introduced a "vertical video converstion tool" in its Snap Publisher suite of self-serve ad creation software. The tool lets advertisers with horizontal video ads transform them into a format that's better suited for mobile viewing, per its announcement.

Insight:

Snap's "first commercial" format aims to reach its mobile audience when Snapchat users start watching its programming, increasing the likelihood that they'll see the non-skippable ad inserts. That priority placement could help to lift brand awareness and recall among Snapchat users, who tend to be younger audiences who rely on their smartphones for entertainment and social interaction. Almost three quarters (72%) of Snapchat's Generation Z users aren't reached by TV, per data from researcher Nielsen cited by Snap, making its new ad placements more significant for mobile marketers.

Almost a third (29%) of consumers are open to seeing video ads, making them slightly more popular that photo carousels that are favored by 27% of people, per survey data that marketing software firm Smartly.io shared with Mobile Marketer. Snapchat's vertical ad format for mobile viewing can be especially engaging, making its news video conversion tool more significant for advertisers.

"The vertical ad format, which Snapchat uses consistently, offers more display options than other social formats, giving advertisers more opportunity to get creative in their content," Robert Rothschild, global head of marketing at Smartly.io, said in a statement shared with Mobile Marketer.​ "As Snapchat pushes to long form videos that compete with Instagram and YouTube, marketers should be taking steps to integrate Snapchat Shows into their overall marketing mix."

Snapchat's new video ad format comes as the company faces growing competition in the mobile video ad market from well-funded startups like Quibi. Snap in the past few years has expanded beyond photo messaging into video content to engage audiences and boost its appeal among advertisers, many of which have avoided placing ads on the platform. More than 60 of Snapchat's shows reach a monthly audience at least 10 million viewers, while time spent with its Discover programming rose 35% in Q1 from a year earlier, Snap's management said in its most recent quarterly conference call.

In addition to highlighting its augmented reality (AR) features that engage consumers with brands, Snap has expanded its range of video ad formats in the past year. In November, the platform introduced a commercial format that runs as long as three minutes after showing six seconds of non-skip video. It also added a Creative Kit for Web to extend functions that previously were only available for mobile apps, giving developers broader distribution within Snapchat and letting them boost web traffic outside the app.​ 

Those efforts appear to be paying off for Snap, which this month reported a 44% jump in revenue to $462.5 million in Q1 from a year earlier. Snap this month said user engagement with advertising grew in March amid record highs in usage as the COVID-19 crisis forced people to stay at home. Snapchat saw a 36% jump in install volume for app ads and a 19% gain in their swipe-up rate — key indicators of user response — in late March from a month earlier.