- Media buyers interviewed by Business Insider say clients are spending more on the app.
- The increase in ad spend on Snapchat differs from client to client, but some clients are spending as much as 40% more this year versus 2018, according to buyers.
- The company is on track to generate $1.36 billion in net ad revenue in the second quarter, up 30% over last year, according to eMarketer.
- Snapchat itself touted the number of advertisers on its platform, with chief business officer Jeremi Gorman saying that "there were more ad accounts active on Snap this quarter than ever before," during the company's earnings call.
- But while spending volume on Snapchat increased 12% in the second quarter of 2019 versus a year earlier, Snap's share of the social ad market (5.4%) declined in the same period, according to Standard Media Index.
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With revenues of $388 million beating estimates of $360.48 million, the stock of Snap Inc., photo-sharing app Snapchat's parent company, leapt more than 10% after the company announced its second quarter 2019 financial results on Tuesday. The company also surpassed daily active use estimates, registering 203 million versus 191.7 million.
But investors are not the only ones bullish on Snapchat. Some media buyers say their clients are spending more on the ephemeral-messaging app.
Parent company Snap, which reports its second-quarter earnings after the market closes on July 23, has seen its stock price soar nearly 200% since its lowest point in 2018 after a redesign fiasco.
While analysts have been encouraged by the app's user-base stabilizing and innovations in advertising, content and gaming, advertisers are lured by its broader reach and improved ad-tracking tools.
Advertisers are increasing their ad spending on Snapchat
The company is on track to generate $1.36 billion in net worldwide ad revenue, up 30% over last year, according to eMarketer, and four ad buyers told Business Insider that clients' spending on Snap has grown year-over-year.
The increase for 360i clients is across the board, said Doug Rozen, chief media officer at the agency. Travis Freeman, EVP of media for VaynerMedia, told CNBC that the agency had boosted spending on Snap by about 20%.
Another media buyer said that several clients were spending 30-40% more on the platform, at the expense of platforms like Pinterest, Twitter, and Reddit.
Jessica Dooley, social practice lead at Mindshare, said that one of the agency's biggest CPG clients had doubled its spend compared to 2018.
"Those that have been activating or testing-and-learning over the past couple of years continue to do so, but today, Snap has become more of a staple in the consideration set for brands versus last year," said Dooley. "It's become table stakes."
Stephanie Bohn, CMO at VidMob, agreed, saying her company has seen a 50% lift in the revenue it makes from Snapchat-related work versus a year ago. VidMob helps brands create custom video ads for platforms including Facebook, Instagram, and Snapchat.
"We do a lot of work with the verticals you would expect, including CPG and retail, and are seeing an uptick with sectors like fintech, auto and travel," said Bohn. "We've seen a 2x lift in volume of Snap Lens projects."
Independent digital media buyer David Herrmann said Snapchat's CPMs of $2 to $3 have gone up slightly, an indication that more advertisers are gravitating to the platform.
Snap's new features are drawing advertisers
Data from MediaRadar showed that 58% of companies that advertised on Snapchat in the first quarter of 2019 are renewing their spending, up from 17% in 2018.
Advertisers have been drawn to the platform as its shift to programmatic has started to stabilize, and with upgrades Snap has made to its ads manager, with features such as target-cost bidding and new bulk-uploading capabilities.
Snap has improved advertisers' ability to improve their reach, targeting, and measurement, putting it on a par with larger, more established rivals.
The company has also rolled out AR filters and gaming features for advertisers, grown its sales organization under new chief business officer Jeremi Gorman, and updated its Android app.
"All of these updates give users more opportunity to spend time on the platform, and therefore make it easier for advertisers to reach audiences," said Mindshare's Dooley.
These changes are helping Snapchat attract a broader base of advertisers, from performance-oriented DTC brands using Story Ads on Discover, to smaller direct-response advertisers and large advertisers. According to 360i's Rozen, a few of the agency's clients are discussing spending millions of dollars in upfront commitments on Snapchat.
Snapchat itself touted the growing number of advertisers on its platform, with chief business officer Jeremi Gorman saying that "there were more ad accounts active on Snap this quarter than ever before," during the company's earnings call.
"Our advertisers retain well and generally increase their spend as we continue to demonstrate consistent, meaningful ROI for them," she said. "As we add more advertisers, we see the health of our marketplace growing with increasing diversity, relevance, and engagement, which subsequently improves advertiser efficiency and user experience."
Still, Snap grew slower than the rest of the category, said John Spiropoulos, VP of products and partnerships at Standard Media Index. While its year-over-year spending volume increased 12% in the second quarter of 2019, its share of the social ad market declined to 5.4% in June 2019 from 7.1% a year earlier, according to Standard Media Index.
While Mindshare advertisers are spending more on Snap, that shift doesn't mean they are pulling from other platforms, said Dooley.
"We haven't seen our social spend decrease drastically or at all for other platforms," she said. "Typically, the social spend is increasing year-over-year, allowing for us to expand to other platforms."
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