Snapchat CPMs have taken a hit

Anne Freier

In Mobile Advertising

November 10, 2017

Snapchat advertising CPMs are going for similar rates as Facebook’s with the big difference that Facebook offers a much larger scale.
According to a report by Digiday, three anonymous ad buyers said that Snapchat CPMs were between $3 to $8. The messaging app has 178 million daily active users compared to the 1.4 billion on competitor Facebook.
Bearing in mind that Snap Inc used to charge brands $750,000 per day to run campaigns, the drop in rates is rather concerning. The problem is that Snapchat cannot compensate for its lower rates by having more advertisers.
Programmatic ad buyers tend to look for larger audiences. Therefore, Facebook and Google are performing rather well. In addition, they provide a plethora of measurement and targeting features which Snapchat cannot currently compete with.
As of right now, it seems that Snapchat’s biggest draw for advertisers is its millennial audience.
Although Snap Inc has been working to expand its programmatic ad offering, the company hasn’t acted quickly enough to the demand.
The company recently revealed that CPMs were down 60% year-on-year and Q3 revenue took a hit at $208 million in revenue, but $443 million losses.
Snapchat launched its API around a year ago, which opened up programmatic ad buying for vertical videos. Around 80% of Snap Ads have since sold programmatically. Before then, advertisers were speaking directly to Snap Inc’s sales team to run their ads, but that meant only large brands were scheduling campaigns.
Melissa Wisehart, the Director at media agency 22Squared said:

“Snapchat previously had the market cornered, explosive growth rates and a hard-to-reach audience squarely in its grasp. They were able to charge a premium for inventory to limited buyers. But as their leverage for this cost was reduced from pressure by Facebook and Instagram, they simply just flooded the market with supply by opening up inventory to more players.”

With Snap Inc’s latest acquisition of Metamarkets the company may be trying to shift the perception of being an exclusive advertising platform.