Commentary

In Shocking About-Face From Shiny New Object Syndrome, Agencies Shy Away From Snapchat

In an about face that, unbelievably, has everything to do with common sense and nothing whatsoever to do with the usual agency-stye thinking when it comes to the latest and greatest social media toy, ad agencies are shying away from Snapchat.

Ever since Snapchat launched its ad program and priced it at approximately $500,000 per ad, agencies have been skittish about making a commitment to the social network. Along with the high price tag, there has been concern over the ability of Snapchat to provide useful metrics for campaigns. That skittishness became more prevalent when Fidelity recently slashed the valuation of its stake in Snapchat by 25%.

Even with upwards of 100 million unique visits per day, agencies and the brands they represent have said they need more concrete information about who uses the service and the ability to better measure campaign success.

Of the concern over Snapchat's measurement and targeting capabilities, RAIN COO Nick Godfrey told Reuters: "If Snapchat doesn't get that figured out, they're in trouble."

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Sydney Williams, manager of social media marketing for General Electric, which just signed a deal with Snapchat for its second campaign, said: "I'm looking forward to Snapchat coming out with a little more in-depth analytics." 

Early this year, Toyota ran a campaign with Snapchat but isn't sure it will continue citing (according to a representative who wished to remain anonymous) the networks inability to provide better targeting capabilities.  

However, even though a recent Coke campaign on Snapchat saw 75% of users skip the ad after three seconds, Coca-Cola North America Senior VP of Content Emmanuel Seuge said: "Snapchat has earned a seat at the table in terms of the options that we look at for consumer engagement. 

While the company has raised $1.2 billion from investors and is said to be valued at $16 billion, it lost $128 million in the first 11 months of 2014 according to a leaked financial statement and, during the same time period, had $3.1 million in revenue. Snapchat did not launch its advertising program until October of 2014. Re/code estimates Snapchat could hit $50 million in revenue by the end of 2015.

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