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Even as users rapidly flow to Instagram, many direct-to-consumer (DTC) brands like Curology and MeUndies are lookingat Snapchat as a more viable advertising opportunity, per Business Insider. DTC brands are increasingly investing in Snapchat's Story Ads, an ad format that appears in the social app's Discover section alongside popular shows and publisher content.
While Instagram still has more DTC brands advertising with it than any other social platform, its dominance has led to saturation and higher ad prices. This reality, combined with the features Snap has added like target-cost bidding and bulk uploading capabilities, are making Snapchat more appealing to DTC brands. That interest has been further solidified by Snap's recruitment plan — it offers a credit to smaller brands to help them experiment with new formats.
DTC brands report several benefits around Snapchat Story Ads:
- DTC brands have reported seeing positive ROI with Snapchat's Story Ads, which are significantly cheaper than Instagram's. Snapchat Story Ad CPM rates — the cost per 1,000 ad impressions — are eight times cheaper than Instagram ads. CPM rates on Instagram can be as high as $16, where on Snapchat CPMs can run as low as $2. And, brands have reported seeing higher ROI with Snap Story Ads versus Snap Ads.
- Rather than presenting a straight ad, the Story Ad format allows brands to build out a story that draws users in more organically. Through its bulk upload feature, the format lets brands build out campaigns of up to 20 images. These campaigns can showcase an entire collection or emphasize a narrative in a way that the pop-up Snap ads — and single-image or video Instagram story ads — can't.
- Snap's Story Ads also let brands gauge shopper intent more clearly because a user actively chooses to watch the ads, per Becky Velazco, senior brand and corporate communications manager at DTC company MeUndies. That has allowed DTC brands to measure interest in a more concrete way, as the ad is not a continuation within stories a user is previously watching, but a separate story in itself.
Even though Snap may be increasing its appeal to smaller DTC brands, user attention continues to shift to Instagram, making it unlikely that a broader movement in brand dollars will occur. Instagram's rising share of user attention has likely come at the expense of Snapchat and Facebook, per a recent eMarketer study.
Instagram's increase in usage may have come at the expense of Snapchat, as the app has seen stagnation in average minutes per user per day over the last few years, and that figure is expected to remain flat through 2021, per eMarketer estimates. Meanwhile, Instagram's time spent has grown every year since 2016, and is expected to add a minute a day through 2021. And while Snap reported a 4 million active user increase for Q1 2019 to a total of 190 million daily active users (DAU), it still lags far behind its competitors: Instagram Stories has over 500 million DAU.
The DTC brands that have opted to allocate more dollars to Snap are generally smaller, and are willing to sacrifice wider viewership for a more intimate — and cheaper — space. But larger brands, which can afford the $10-$16 CPM price tag on Instagram, and have more of a curated campaign style anyway, will likely stay put for the app's superior, growing engagement and user base.
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