Snapchat recently integrated advertisements into its Our Story feature for the American Music Awards. Interspersed with content provided by celebrities and music fans were behind-the-scenes looks at the production of the awards show sponsored by Samsung Galaxy.
This is a big step forward from its first advertisement, which pushed a movie trailer to users' story feeds, and Snapchatters could elect to view it or let it expire. By integrating the ads with content users actually want to see, Snapchat is taking a big step forward with its ad efficacy.
Snapchat, in fact, has the potential to become the place for big brands to monetize big television events instead of using Twitter (NYSE:TWTR).
A natural fit for video ads
Snapchat, for those who don't know much about it, is an image and video sharing platform, and the Our Story feature, which collects Snaps from big events using geo-tagging, is almost entirely video. So, while Twitter and Facebook (NASDAQ:FB) try to push videos into their platforms and attract advertisers to use videos, Snapchat can come to advertisers and tell them, "Everybody already watches videos on our platform."
Both Facebook and Twitter are making the push into video advertisements in an effort to increase average ad prices. Facebook added autoplay videos to users' Newsfeeds earlier this year, and is slowly rolling out video ads with high minimum ad spends. Twitter added one-click video plays with image previews this year, as well, and is working with partners like the NBA to increase the amount of video on the platform.
Twitter also announced at its recent analyst day that it will have a bigger emphasis on video going forward. It will add the capability of capturing real-time video and editing it in the Twitter app. The company expects this feature to increase the amount of video content on the platform, which will make video advertisements seem more natural.
Snapchat still has work to do in working with advertisers. Its first two ad campaigns -- Samsung with the AMAs and the stand-alone Ouija movie trailer -- both failed to capture the feeling of a typical Snapchat. In other words, they were too professional. Nonetheless, the potential for native video ad campaigns is highest on Snapchat among the three social networks mentioned here.
Twitter is giving Snapchat the monetization game plan
Snapchat is becoming more like Twitter with each new feature it adds. While the company initially rolled out a product that couldn't be more different from Twitter with its private sharing -- compared to the extreme publicity of tweeting -- the two have converged at Our Story and curated timelines.
In September, Twitter CFO Anthony Noto mentioned that he thinks curated timelines could drive more ad revenue than users' home timelines. He made the comparison that curated timelines were like advertising on ESPN versus ABC. Clearly, there's a more targeted audience on ESPN.
Snapchat is already compiling Our Stories for all sorts of events with diverse audiences: music festivals, college football games, award shows, and beer festivals. All of these events attract specific demographics that are easy to target with advertising even without additional data on the users.
This is exactly part of Twitter's strategy with curated timelines and logged-out visitors. That's why the company plans to introduced hundreds more curated timelines over the next year for events all over the world.
What does this mean for Twitter investors
Part of Twitter's strategy is to "connect people to their world." As Snapchat expands its network and feature set, it's starting to accomplish the same goal, and offers an attractive platform for advertisers looking to use video instead of typical display ads.
Twitter's network is still bigger than Snapchat's, but some of the most popular content on the platform is based around live sports and awards shows, which is something Snapchat is getting very good at and will start competing with Twitter for ad dollars. Still, as ad spending shifts from television to digital, both companies have room to grow.
Twitter is still the go-to destination for news and information, but for big television events, it's got some competition.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.