Brief:

• Snapchat, the image-messaging app with 191 million users, has seen steady growth in its programmatic augmented reality (AR) ads since introducing the format in November, Digiday reported. More than 100 brands have run those ad units, including Foot Locker, Nike and Hershey’s, the publication said, citing Snapchat as its source. 

• Foot Locker and Jordan Brand during the holidays created four Snapchat AR ads for newly released shoes in the Air Jordan 1 Gatorade collection. Foot Locker debuted the two-day campaign on Christmas Day, and saw an average play time on the AR lenses of 45 seconds with 4 million impressions.

• BMW in November first tested Snapchat’s Snap Ad to AR augmented reality ad unit, which lets people swipe up on a video or image to trigger a related branded lens. It was the first AR ad unit that brands could buy programmatically on Snapchat.

Insight:

The news that advertisers appear to be embracing Snapchat's programmatic AR ads is a bit of good news for the platform as it struggles with declining interest from influencers, users and brands. The company in its last earnings call said it anticipates revenue gains to "decelerate substantially" in the current quarter from Q1 2018, underscording the challenges it faces as competitors like Instagram and Pinterest continue to expand. 

Advertisers likely have several reasons to try the Snap Ad to AR format, including their lower cost compared to Snapchat’s lenses even though the new format has lenses. Snapchat’s programmatic Snap Ad to AR ads have been auctioned at $3 to $8 CPMs, matching the platform’s regular Snap ads, per Digiday. Snapchat also cut the minimum that marketers have to pay to buy ads on Snapchat’s self-serve platform from $100 a day to $50 a day. Snapchat’s lenses are more expensive because they are placed more prominently on the app rather than behind an ad. That means users have to swipe a Snap Ad to AR ad to reach the lens. Lens prices have decreased since last year. The price of a lens has fallen from about $500,000 to $1 million a day in December to a current rate of $40,000 a day in addition to an agreed-upon CPM that ranges from $8 to $20.

Snap, the parent company of Snapchat, has developed several new strategies to grow its audience and appeal to advertisers in the past year, and this includes offering more ads through programmatic buying. The company helped to pioneer the use of AR in advertising with its masks, lenses and filters that people almost couldn’t resist sharing on Snapchat’s image-messaging platform. The company also rolled out a redesigned app to make its interface less confusing to new users, but ended up alienating many of its core users and is now rolling back some of those changes.