Snapchat’s new ad format akin to takeovers (SNAP)

Robert Elder
Snapchat DAU

BII


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Snapchat is reportedly pitching a new ad format that it guarantees will be seen by all US users that access a section of the app that the company monetizes, according to Marketing Land.

The new ad unit is reportedly called “Snap Ads Max Reach,” and will only be available in the US initially. Here are a few observations regarding the new format:

  • They’re similar to homepage takeovers. Some publishers offer homepage takeovers that allow brands implement creative ad units, including background skins and full banners ads, on a webpage for an entire day. They’re used to crowd-out competitions from other advertisers, and gives brands 100% share of voice on publisher pages. Other competing platforms already offer takeover units, like Instagram’s Marquee and Twitter’s First View ad formats.
  • This tactic is well suited for event-driven campaigns. Since the ad format will last for an entire day, campaigns that are oriented around specific events lend themselves well to the platform. Some examples are movie release dates or launch dates for a new tech device.
  • The drawback is less targeting. Since every person that opens up a section of the app where they could potentially see an ad will see that day’s “Max Reach” ad, there is virtually no targeting available to users. This means that there could be wasted ad spend as ads will be seen by all users, not just the target market of the campaign.

There's no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.

Ad tech companies are intermediaries between advertisers and publishers, and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic ad spend in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020. 

But ad tech's ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of revenue pie, one of the many drivers of increased consolidation in the space.

Kevin Gallagher, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on ad tech that examines the different players involved in the process of delivering ads, the formats that are driving growth (notably mobile and video), and the factors that are driving increased consolidation over the coming years.

Here are some key points from the report:

  • By 2020, mobile will be the biggest online advertising market, and video the fastest growing.
  • So-called "walled gardens" Google and Facebook lead a relatively small group of players that attract the vast majority of digital-ad spending in the US today. 
  • Growth can be challenging for players outside the walled-garden duopoly, and many companies are reaching a level of maturity that may prompt investors to push for an exit.
  • Ad tech is poised for consolidation, and the number of companies in the industry will decline significantly over the next few years.
  • Companies specializing in certain ad formats like mobile, video, and TV are attractive targets. They are well positioned to take advantage of the fastest growing segments of digital media.

In full, the report:

  • Forecasts US programmatic revenue through 2020.
  • Highlights the factors driving consolidation, and identifies new acquirers and attractive targets.
  • Explores the challenges ad tech companies face including the dominance of walled gardens, ad blocking and measurement.
  • Outlines emerging technologies that will help propel ad growth in the next decade.

Interested in getting the full report? Here are two ways to access it:

  1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. » START A MEMBERSHIP
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