Some Brands Wary of Paying Snapchat Top Dollar for Short Ads

Snapchat has reportedly set an asking price of $750,000 per day to advertise on its messaging app, a figure some say is too high for a young app. Companies such as Samsung, McDonalds, Universal Pictures and Macy’s were among the early sponsors who paid for quick videos and photos called “Snaps.” However, the new rate may prove unrealistically high, despite the name recognition of early sponsors. Snapchat says it offers the ability to reach millions of people through its Recent Updates and Our Stories live feed.

Snapchat_Logo“The app has been soliciting only the top brands — ‘category leaders’ — to buy placement, and it’s disclosing audience numbers to attract the dollars it wants,” Adweek reports. “Its stories can draw tens of millions of viewers a day, according to advertisers who said they heard the stats from Snapchat’s team. The app has topped 100 million monthly users.”

The messaging app has the potential to help companies reach millions of people in a single day through photos and short form videos that users can access on their live feeds. However, Snapchat has reporting limitations on the data it accrues.

Snapchat does not have the ability to distinguish between male and female viewers of an ad, and it does not offer age breakouts, shared an anonymous advertising executive. While the ads on Snapchat require user engagement (users have to click on an ad to view), some ad execs are hesitant about meeting Snapchat’s quote for ads that quickly disappear after they are opened.

Snapchat’s advertising strategy is still in an early stage, so improvements to its data and reporting may be in development. The company recently released a study with the assistance of MillwardBrown to show that its ad placement helped companies achieve better brand awareness.

“Snapchat has said it offers brands the opportunity to reach teenagers,” Adweek reports. However, that could also mean that Snapchat is a much less desirable platform for companies aiming to reach an older demographic.

Snapchat’s $750,000 asking price exceeds YouTube’s price of about $500,000 per day for a masthead. “They’re going to have to negotiate down,” said one ad exec.

Related:
Be the Star of Your Own Snapchat Story, The New York Times, 1/14/15