Research Briefing: Will Snapchat’s rebrand bring in more ad dollars?

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In this week’s Digiday+ Research Briefing, we examine how Snapchat is pitching itself as an alternative to current social platforms, how Priceline and other e-commerce companies are approaching generative AI, and how legacy programmatic media buying practices often disadvantage Black-owned media companies, as seen in recent data from Digiday+ Research.

50% of marketers say Snapchat’s biggest challenge is lack of scale

Snapchat’s latest brand campaign pitches the platform as an alternative to the current state of many social media platforms, harkening back to the days of using social media as a way to connect with friends and family. The platform bought airtime during the Grammy’s and the Super Bowl — its first Super Bowl ad — to relay a message of connection during events that huge numbers of people gather around, explained Snapchat chief creative officer Colleen DeCourcy.

While the platform isn’t planning to spend more on advertising than it previously has, Snapchat is “changing the strategy of how we go to market,” said DeCourcy. Snapchat will tout the new brand positioning with the linear TV spot, out-of-home media in cities like New York City and Los Angeles, and print and digital ads. However, competition with social behemoths remains stiff and some industry analysts are skeptical of Snapchat’s ability to compete for ad dollars at scale.

Snapchat came in last among social media platforms that received the biggest portion of marketers’ 2023 ad budgets, according to Digiday+ Research’s CMO Strategies series.

When considering whether to place ads on Snapchat, half of marketers (50%) said lack of scale is the biggest challenge they face. Platforms that focus on user-generated content lack scale for brands that invest in paid ads or sponsored content because they struggle to establish an effective, native presence. These platforms emphasize users engaging with each other, and brands that primarily post curated visuals often don’t gain enough engagement because their posts don’t feel organic within these environments. Additionally, with consumers leading the discussion, companies tend to go along with trends rather than creating them, resulting in a reactive strategy rather than a proactive one.

Insights and stats:

  • “How can Snap really compete with giants like Meta, TikTok, and YouTube? With just over 400 million [daily active users] it’s dwarfed by the billions at Meta, YouTube, and TikTok. Additionally, Snap’s $1.36 billion in [fourth quarter] ad revenue barely compares with Meta’s $38.7 billion last quarter.” — Brendan Gahan, entrepreneur and former chief social officer at Mekanism
  • Almost half of marketers (48%) said engagement is their primary measurement of success on Snapchat. Rather than measuring engagement by the amount of likes or shares a post receives, engagement is most valuable in the form of conversations among users — a successful engagement would be a positive mention of a brand.
  • Nearly one-third of marketers (30%) said brand safety is the second biggest challenge they face on Snapchat. Brands have less control on UGC-focused platforms due to the emphasis on and foregrounding of content creators’ unfiltered opinions and comments. Snapchat provides brand safety tools for marketers and will be adding more brand safety updates and tools later this year.

Read more about key metrics and challenges on social platforms

Digiday+ Research digest

Companies like Priceline are using large language models — the backbone of generative AI — to overhaul entire platforms for customers. Last week, the online travel agency added features to its AI travel assistant Penny to help customers find flights, car rentals and vacation packages. Previously, Penny could only help with finding accommodations. Priceline is testing generative AI in other parts of its business including paid and organic search, messaging formats and various creative assets. Across the board, brands and retailers are recognizing the impact that generative AI can have on their businesses — and they’re making investments to utilize the technology, according to a Q4 2023 survey from Digiday+ Research.

Insights and stats:

  • More than half of brand and retailer professionals (58%) said in late Q4 2023 that their companies were investing in or using generative AI or natural language processing tools.
  • “We as a company were very early and enthusiastic about embracing the possibility of generative AI. There’s no denying that it is going to change every facet of business and life, so we didn’t want to be shy about it.” — Lesley Klein, svp of strategy and brand marketing at Priceline
  • There’s still quite a bit of room for generative AI to grow among brand marketers. More than a third of brands and retailers (35%) said at the end of last year that they weren’t using generative AI just yet.

Read more about brands’ and retailers’ use of generative AI 

Legacy programmatic media buying practices often disadvantage Black-owned media companies, and Kerel Cooper, president of advertising at Black-owned media company Group Black, joined the latest episode of the Digiday Podcast to shed light on the issue. Group Black worked with ad verification firm Double Verify to gather research that illustrates just how much ad inventory on Black-owned media companies is cut from media budgets when rudimentary tools like keyword blocklists and domain-level categorization are implemented in media buys. Currently, agencies’ clients still have a strong preference for programmatic display ads over direct-sold, according to Digiday+ Research surveys conducted throughout 2022 and 2023.

Insights and stats:

  • Nearly two-thirds of agency professionals (61%) said their clients spend a moderate, large or very large portion of their budgets on programmatic display ads, versus just over one-third (35%) who said their clients spend a moderate, large or very large portion of their marketing budgets on direct-sold display ads.
  • “[Programmatic] algorithms are looking for the largest pools of inventory at the cheapest price possible. And when you think about Black-owned media and diverse-owned media, some of these organizations are very small- or midsize, so they may not have the scale that a lot of other companies have.” — Kerel Cooper, president of advertising at Group Black
  • The percentage of agency clients who spend a lot on programmatic display ads has been trending downward. In Q3 2022, nearly half of agency pros (43%) said their clients who invest in online display ads spend a large or very large portion of their budgets on programmatic ads. That percentage fell to 35% in Q1 2023, and to 30% in Q3 2023.

Read more about agency clients’ investments in programmatic

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