Advertisers who are pumping large spends into their Snapchat campaigns may want to reconsider.
An Uphill Battle
A new survey released by financial services company Cowen revealed that things aren’t looking particularly great for Snapchat when it comes to generating ad revenue.
Out of the media buyers surveyed, an overwhelming 90% of them stated that their clients favored putting their advertising dollars towards Instagram Stories over Snapchat Stories, despite Snapchat being the pioneer of the story concept. In addition, nearly half (47%) of ad buyers also claimed that they ended up spending less on Snapchat video ads than they had originally planned, and its overall content quality was ranked second to last out of nine possible options, with only ad exchanges trailing them.
It’s expected that Snapchat will report 192 million users when it publishes its quarterly results next week (August 7th), which would be a disappointing gain of only 1 million new accounts when compared to that of its rival social platforms.
Fan sentiment seems to be taking a hit as well, with Cowen reporting that Snapchat users are spending 7% less time in the app than they were a year ago. To make matters even worse, it’s also losing its hold with teenagers – Snapchat’s core demographic, with a recent Business Insider report stating that a fifth of Gen Z’s are using the app less.
A key reason for these downward trends was Snapchat’s big navigational redesign, which users were not happy about, that occurred earlier this year. In fact, it was so off-putting that a Change.org petition named “Remove the new Snapchat update” received over a million signatures, causing Snapchat to reverse some of its decisions.
Not Going Quietly
While the skies are certainly looking a little cloudy for Snap Inc right now, the company can at least say it’s not from a lack of effort. This year the platform has made a series of changes, including adding an unskippable ad format for advertisers, providing deeper insights to its app install ads, and expanding its marketing API to everyone among other things.
Weighing Your Options
There is no doubt that advertisers will want to ensure their display campaigns stretch beyond Snapchat. However, there are still some considerations to make. First of all, Snapchat is still gaining users, even if it’s a small number compared to Instagram. More importantly though is Snapchat’s CPM (cost per thousand impressions), which was an average of $2.95 compared to Instagram’s $4.20 and Facebook’s $5.12 in Q1 of 2018.
Even if the userbase isn’t as large and strong as its rivals, that’s a low CPM in comparison, making it a good platform for testing new campaign ideas without breaking the bank.
Still, all signs seem to suggest that Snapchat has some soul searching to do, and it would be wise for advertisers who haven’t been having luck driving lots of quality Snapchat traffic to consider shifting some of their display spend to more popular platforms like Facebook or Instagram.
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