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Snapchat is lowering the prices for advertising on the platform, according to Digiday.
Buying ads through Snapchat’s Ads application programming interface (API) is now rumored to cost advertisers a minimum of $100,000 per ad, down from the $500,000 asking price that Snapchat asked of advertisers when it first opened the platform to brands in late 2014.
Lowering its minimum price for ads is a clear sign of Snapchat's intent to attract more marketers to the platform. It will help its API Partners get more business from clients who wish to advertise on the platform, and will also act as an additional incentive for technology and creative companies who are not yet API members to partner with Snapchat.
A number of recent Snapchat-related events provide context for the reduction in Snapchat ad prices:
- Game-changing ads API release. The company unveiled an Ads API at the beginning of June – a crucial step towards realizing the platform's monetization potential. Previously, Snapchat had sold ads purely through direct sales with brands and agencies. However, with the Ads API, partnering companies can tap into Snapchat’s technology stack to create, deliver, and manage ad campaigns in an automated way. The newfound ability of third-party companies to sell ads on through Snapchat's API opens the platform up to a bevy of new ad revenue opportunities.
- A not-so-unprecedented price drop. This is not the first time Snapchat has reportedly reduced its pricing for advertisers. Last November, the company supposedly slashed the minimum price for any campaign previously valued at $700,000 to below $100,000, according to Venture Beat. In February, the starting price for a brand to takeover a Snapchat Discover channel for the day dropped to around $50,000, according to CNBC. The volatility of Snapchat ad prices is understandable given the nascency of the platform’s ad formats. As Snapchat matures, and marketers gain clearer insights (with the help of the Ads API) into the platform's return on investment (ROI), ad prices on the platform will begin to stabilize.
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