Snapchat is a popular social media app that allows users to share photos, videos, and messages that disappear after being viewed. One of the key features of Snapchat is Stories, which allow users to post content that remains viewable for 24 hours. Many Snapchat users have noticed that ads sometimes appear between stories they are viewing. There are a few reasons why ads show up in Snapchat Stories.
Snapchat’s Business Model Relies on Advertising Revenue
The main reason Snapchat features advertising is that the app makes money by selling ads. Snapchat is a free app that needs to generate revenue to support its operations and continue development. The company’s primary business model relies on earning money from advertising. Showing ads to users as they view Stories and other Snapchat content provides a way for brands to reach Snapchat’s large user base and generates income for Snapchat.
Snapchat has over 300 million daily active users, many of whom are in a valuable target demographic of young people aged 18-34. This makes the app highly appealing to brands looking to promote products and services. Snapchat can charge advertisers to display ads and earn significant revenue as a result. Ads on Stories are integral to that monetization strategy.
Native Advertising Approach
Snapchat takes a native approach to advertising, meaning the ads are designed to blend into the natural user experience, rather than be disruptive or annoying. The ads in Stories look very similar to regular Snapchat content and can easily be swiped past. This makes users more likely to tolerate the ads, while still allowing brands to reach a massive audience in a customizable format. The native style also allows ads to seem less intrusive.
Ads Help Keep Snapchat Free
Ultimately, having some ads allows Snapchat to remain free for users. Without ads generating revenue, Snapchat would likely have to charge a subscription fee or find some other way to monetize that could impact user experience. The ads allow Snapchat to earn money from brands while letting users enjoy the app at no cost. This trade-off makes most users accepting of some advertising while viewing Stories.
How Snapchat’s Ad Targeting Works
Snapchat can maximize the effectiveness of ads by using precise ad targeting capabilities. This allows brands to show ads that are highly relevant to specific groups of users based on their interests, demographics, behaviors and more. Targeting makes the ads useful rather than random. Here are some of the ways Snapchat targets ads to users:
User Data and Preferences
When you use Snapchat, the app collects data based on your usage including who you interact with, what content you view, your location, demographic info, and more. This allows Snapchat to build a profile of your interests and habits as a user. The more you use Snapchat, the more data they can collect to refine their targeting.
Pixel Tracking for Web Browsing
Snapchat implements tracking pixels that monitor user activity on websites outside Snapchat. This lets them gather info about browsing history and online behaviors to target ads. For example, if you visit sports-related sites, you may see more sports ads.
Contextual Filters
Snapchat targets ads contextually as well. For example, they may show travel-related ads to users who post Snaps from airports. Event-based ads are also common, such as films opening on a particular date.
Advanced Options for Advertisers
Snapchat provides advertisers with robust targeting options so they can choose to show ads by location, interests, device type, and more. Advertisers can select very specific parameters to ensure their ads are shown to the right audiences.
Here is an overview of some of Snapchat’s top ad targeting capabilities:
| Targeting Method | Details |
|---|---|
| Demographics | Target by age, gender, household income, education level, marital status, homeownership |
| Location | Target users by country, region, city, or within a customizable radius around a location |
| Interests | Target based on lifestyle categories like foodies, fashionistas, sports fans, and over 150 other interest groups |
| Behaviors | Target high spenders, early tech adopters, frequent travelers, and over 60 other behavioral groups |
| Context | Target ads to users in certain locations like airports, venues, or events |
| Custom Audiences | Target users based on advertiser’s own customer email lists or other first-party data |
Why Do I See Certain Ads?
Based on Snapchat’s ad targeting capabilities, there are a variety of specific reasons you may see certain ads on Snapchat Stories or elsewhere in the app:
Demographics
Your gender, age, location and other demographics are used to show you relevant ads. A 20-year old male in New York may see different ads than a 40-year old female in Los Angeles.
Your Interests and Habits
The ads you see likely relate to topics, products, brands or events that you have shown interest in based on Snapchat data. Everything from your Snaps to conversations can inform the ads.
Pages and Profiles You Follow
Snapchat can target you with ads related to the publishers, brands, celebrities and influencers you follow on the app. Your follows provide insight into your tastes.
Websites You Visit
Thanks to tracking pixels, Snapchat knows what types of websites you visit and uses that browsing data to serve ads. Sporty sites mean sports ads.
Your Location and Context
If you are at a specific venue or location, you may get ads associated with that place. Travelers get travel ads.
Retargeting
Snapchat retargets users who have previously seen or engaged with an advertiser’s brand. For example, if you view a site for shoes, you may later see an ad for that same shoe brand on Snapchat.
Ways Advertisers Buy Snapchat Ads
There are a variety of specific ad formats and placements that brands can purchase from Snapchat. The following are some of the main ways advertisers can buy Snapchat ads:
Snap Ads
These are full-screen video ads up to 10 seconds that appear between Stories. Advertisers pay for Snap Ads on a CPM (cost per thousand impressions) model based on how many users view the ad.
Sponsored Lenses
Special lenses and filters sponsored by brands let users augment photos and videos. Advertisers pay on a CPM basis for Sponsored Lenses.
Sponsored Geofilters
Custom location-based filters are sponsored by advertisers and appear when users post in certain locations. Brands pay on a CPM basis and can geo-fence the filters.
Snapchat Ads Manager
This self-serve platform allows advertisers to easily buy and manage Snapchat video and lens campaigns using targeting, bidding, and budgeting tools.
Snapchat Ad API
Larger brands can programmatically buy and optimize Snapchat ads at scale using the Snapchat Ad API and third party platforms.
Third-Party Ad Platforms
Advertisers can also buy Snapchat ad inventory through demand-side platforms (DSPs) and ad exchanges that aggregate inventory from Snapchat and other social networks.
Sponsored AR
Brands can pay to sponsor augmented reality experiences featuring their products which users can access through the Snapchat camera.
How Much Do Advertisers Pay Snapchat?
Snapchat charges advertisers on a CPM (cost per thousand impressions) basis. This means advertisers pay based on how many times their ads are seen by users. The exact costs can vary based on factors like targeting, competition, ad formats, and negotiating deals with Snapchat reps.
According to marketing data, here are some approximate costs advertisers often pay Snapchat:
- Snap Ads – $10 to $20 CPM
- Sponsored Lenses – $450,000 to $700,000 for one day in U.S.
- Sponsored Filters – $125,000 for one day geofence in U.S.
- Sponsored AR – $250,000 to $500,000 for one day
As you can see, Snapchat ads can be quite expensive for advertisers. But Snapchat justifies the high rates based on their sizable audience of hard-to-reach younger demographics. Brands are willing to pay a premium to get their ads in front of Snapchat’s users.
Opportunities for More Targeted Ads
While Snapchat already has sophisticated ad targeting capabilities, there are still opportunities to serve even more targeted ads to users:
Leveraging Conversations
The content of conversations between users on Snapchat provides a wealth of data that could inform ad targeting. With proper privacy protections in place, conversation data could better indicate interests.
User-Submitted Interests
Snapchat could allow users to explicitly submit their interests and preferences to opt-in for more tailored ads. This first-party data could be more reliable than inferred interests.
Expanded Retargeting
Advertisers want to retarget users who have previously seen their brand across channels. Expanding capabilities to track users outside of Snapchat and reconnect them to their Snapchat ID could enable retargeting ads.
Integrating External Data
Snapchat could potentially enhance targeting by allowing advertisers to submit CRM data or third-party data they have on users to help identify the right audiences.
Predictive Analytics
Advanced analytics using machine learning algorithms could help Snapchat better predict which ads might be most relevant to an individual user based on patterns in their usage and engagements.
Conclusion
Snapchat shows ads within Stories and across the app because advertising is the main way they generate revenue. The native, non-disruptive ads allow them to earn money while keeping the app free for users. Targeted ads try to show content relevant to each user based on their data and behaviors. While ads in Stories may sometimes be annoying, they help support Snapchat and often relate to your interests. Looking ahead, Snapchat may find new ways to make ads even more contextual and personalized.