Last month, Snap (NYSE:SNAP) shares jumped when the company introduced its self-serve ad platform called Snapchat Ad Manager, which promised to remove friction in the ad-buying process. Instead of having to work with an account manager or commit to large ad spending, just about anyone could go purchase ads on Snapchat. That's good news for smaller advertisers that are looking for more exposure and/or lack large budgets.
Snapchat Ad Manager went live on Snap's site earlier today.
Opening up for the little guys
Snapchat Ad Manager is an important move for Snap to scale its nascent ad platform. By adding automated solutions for smaller advertisers, Snap can cater to the important small and medium-sized business (SMB) segment, and save on costs by reducing the reliance on labor-intensive sales cycles.
Here's Chief Strategy Officer Imran Khan on the first earnings call last month:
Last week we announced our first Snap Ads self-service product, called Snapchat Ad Manager. Our goal is to put the power of our ad products into the hands of every advertiser, regardless of their size. This tool supports all of our ad products, targeting capabilities; and goal-based auction solutions, which allows advertisers to bid for swipes or bid for app installs.
The new tool allows advertisers to see how campaigns are performing, choose specific objectives for campaigns, and target ads based on a handful demographic factors. App-install ads are a growing part of the ad market.
Snap also announced a few other tools, such as Snap Publisher, which helps advertisers create ad content in a vertical video format using existing brand assets, and a Certified Partners program, which refers advertisers to a handful of ad tech partners that are experienced with Snap's advertising APIs.
It's still just the beginning
Snap's ad platform is still in the early innings, and these announcements are important steps in the company's efforts to grow, automate, and scale its platform. At this point, it's really going to boil down to execution. Snap's first public earnings release was an immediate disappointment to public investors, with $149.6 million in revenue falling short of expectations.
Despite CEO Evan Spiegel's vocal disdain for ad targeting, which he considers "creepy," Snap has to embrace -- and improve -- ad targeting if it hopes to build a successful ad business. While not directly related to ad targeting, Snap did just acquire Placed, which is an ad measurement tool that uses location analytics to attribute in-store visits to online ads. In contrast, larger rival Facebook offers far more sophisticated ad targeting; beyond things like demographics or location, Facebook can target ads based on interests and online behaviors like what other apps people use or what Pages they interact with, since as a mainstream platform Facebook gathers much more user data that can be used for ad-targeting purposes.
With rising hosting cost commitments in the years ahead, and public investors closely scrutinizing quarterly earnings releases, the pressure is on for Snap to execute.
Evan Niu, CFA owns shares of Facebook. Evan Niu, CFA has the following options: long January 2019 $20 puts on Snap Inc. and long January 2018 $120 calls on Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.