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Snapchat opened its Ads API platform to programmatic bidding last weekend, enabling marketers to buy ads through automated processes and with more precise targeting, The Information reports.
In doing so, Snap (as the social network's parent is now known) has lifted a barrier to bring in massive inflows of ad spend.
This is a crucial step for Snap to grow revenue as it progresses toward an IPO, for which paperwork is expected to be filed in the coming months, according to The Information. The company is on course to beat its $300 million revenue goal for the year, and is aiming for $1 billion in revenue next year.
But the company is taking a slow approach to opening up its API to avoid flooding its platform with low-quality ads. Here's how:
- Restricting the types of ads sold on the API. Only ads between user stories are being handled by third-party ad tech firms. Real estate on Live Stories and the Discover section remain off limits for now. Differentiating access to ad space like this helps divide Snapchat inventory into “automated” and “premium” categories, with the latter retaining higher quality creative and steeper price points.
- Restricting entry to third-party partners. Only a select group of companies can plug their ad serving and measurement tools into Snapchat's API. Among the lucky few who have been granted permission are Brand Networks and 4C. Limiting entry to its API will help Snapchat build new solutions in a sustainable way as it continues to scale it ad tech platforms.
- Discover partners cannot join in on the act. Partnering media companies with content on Discover are not yet allowed to use their programmatic tools to sell ads on Snapchat. This will frustrate publishers hoping to run cross-platform campaigns via their own ad tech stack, but disintermediating publishers from the ad sales process helps Snapchat to centralize control over its platform.
- Maintaining order even with an open API. Snap will review campaigns and creative to prevent low-quality ads from appearing on its platform. This tight control means that current automated ad buying process – while improving on direct negotiations with Snapchat – isn’t too far removed from the original direct sales process.
- Allowing more precise targeting, with limits. Snap partnered with companies like Moat and Nielsen for ad measurement and targeting. On the API, marketers can target users according to age, gender, location, device/operating system, mobile carrier, content affinity (for placing native ads in the Discover channel) and email addresses. Retargeting features are still missing, although the company is said to be working on sequential messaging, a form of retargeting to send new ads to users who have engaged with an earlier one.
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