- Snapchat is testing so-called dynamic product ads on its platform, with plans to roll them out widely, four ad agency sources told Business Insider.
- While retailers have been able to include their product-catalog feeds in Snapchat ads since September, the ads had to be targeted manually.
- The idea behind the dynamic ads is to automate the ad-building process so advertisers don't have to create a new ad for every item, the sources said.
- Sources said the ads would make Snapchat more competitive with Facebook, Twitter, and Pinterest, especially for e-commerce, direct response, and performance ad dollars.
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Snapchat is revving up its retargeting engine to attract e-commerce ad dollars.
The ephemeral messaging app is planning to roll out what advertisers call dynamic product ads, four ad agency sources told Business Insider. These ads are designed to automatically retarget ads to people on Snapchat after they have expressed interest in a company on its website, app, or elsewhere on the internet. Such ads already exist on Facebook, Twitter, and Pinterest.
While retailers have been able to import their product-catalog feeds on Snapchat to create other ads such as Story Ads, Snap Ads, and Shoppable Snap Ads since September, the ads had to be targeted manually until now, sources said. The idea behind the new ads is to automatically pull details from advertisers' catalogs so they don't have to create a new ad for every item, the sources said.
Snapchat's parent company, Snap, declined to comment.
How Snapchat's dynamic product ads will work
The format is being beta tested with two advertisers, according to one source, but it is expected to be more widely available later in the year, another source told Business Insider.
Sources described the new ads as an evolution of Collection Ads and Advanced Pixel Targeting that Snapchat launched in October that let advertisers showcase multiple products in one ad and create lists of whom to target. Two sources said the new ads were part of a broader effort by Snap to make its self-serve ad platform more intuitive.
Since these dynamic ads will be plugged into Snap Pixel, Snapchat will be able to show advertisers how well custom audience retargeting works, said Mike Dossett, a vice president and director of digital strategy at RPA, who is not one of the four aforementioned sources and did not have direct knowledge of the beta test.
"It would bring them to parity with some of the dynamic retargeting capabilities of other major players," he said.
Snap is making a bigger play for e-commerce dollars
Snapchat has come a long way since its early days, when ads consisted mostly of large deals with big-name advertisers seeking to do brand-building and awareness. In recent years, Snapchat has been catering to performance-driven advertisers with initiatives like a self-serve platform.
This new ad product is meant to help Snapchat appeal to e-commerce, direct-response, and performance advertisers and compete with Facebook, Twitter, and Pinterest for ad dollars, sources said.
"Snapchat is becoming a direct-response darling," one source said of the platform's lower CPMs compared with other platforms. "This was a really interesting turn of events for a platform that was initially priced way too high for most advertisers, when ad products just rolled out, and has opened the door remarkably for a lot of our more direct-response focused clients."
The change comes as the company is on the upswing after a tumultuous 2018, attracting more advertisers and ad dollars.
E-commerce has become a priority for the company, with its chief business officer, Jeremi Gorman, saying during the company's second-quarter earnings call this week that "thousands of advertisers" had already uploaded their product catalogs to Snapchat. She said the company expected e-commerce ads to drive revenue growth in the second half of the year.