How Snapchat uses data...hopefully it pays off

In my earlier post I was speaking about the IPO of Snapchat and what I believed was an over valuation. I wanted to give an overview of the current Snap Inc Strategy and then breakdown the measurement tools Snap is using to analyze their data. Snap Inc., has largely ignored less-developed countries in favor of North America and Europe, where the big advertising dollars are and where Snapchat gained 75% of its 161 million daily users.

The company is managed by its founders and they rejected suggestions that it branch out. They turned down employee proposals to make a lightweight version of its app for regions with slow internet. It also has prioritized the version of its app running on Apple Inc.’s ios system over Google’s Android versions, which is popular in emerging markets. Snap is going after the low-hanging fruit,” says Cathy Boyle, analyst at emarketer. “There’s more money being spent on mobile advertising in those markets. It doesn’t mean the money will be spent on Snap, but it gives Snap a bigger marketplace to compete in.” More than 60% of Snap’s daily users are concentrated in the top 10 ad markets.

As far as Snap’s data analytics there was a very interesting and insightful ADWEEK article that broke their tools down beautifully. Snap is using the agency Fetch to run their mobile ad campaign. They will be using interest-level targeting that serves ads to people based on what types of videos they have watched. “Such sophisticated targeting wasn’t available to marketers a year ago and reflects the mobile-messaging company’s aggressive moves into the world of ad tech and measurement while hoping to compete with Facebook, Twitter, Pinterest and others”.

“Since revealing its API (application programming interface) last summer, Snapchat has expanded from 10 to 15 measurement partners that help marketers analyze metrics like views, brand awareness and conversions”. Additionally last week, Snap signed on with the measurement firm Moat to create a data-based score to show its ads meet watchdog Media Rating Council’s guidelines for viewable impressions. Thirdly, in the same week, the app debuted a self-serve ad buying platform that includes a dashboard with a multitude of stats. “Still, there remains a gap, in terms of comparing Snapchat ads to other types of media, especially with the app’s goal of cutting into big TV budgets”.

Here is a look at Snapchat’s five types of measurement tools as explained by the ADWEEK article:

1. Views and impressions

“With advertisers increasingly demanding platforms like Snapchat, Google and Facebook undergo full-blown MRC audits; Snapchat is beginning to work with Moat and the MRC to create a “viewability score” to assess if consumers see vertical ads.

“That’s probably where we can compare them to Facebook, Pinterest, Twitter,” explained Torrey Taralli, head of U.S. paid social at Fetch.

Snapchat has similar arrangements with a handful of other measurement firms to track clicks and impression data. “Our campaigns need to have a solid foundation. We need confirmation that our ads are viewable and being seen by our target audience first and foremost,” added Whiting of digitaslbi.”

2. Audience targeting

“Snapchat offers 60 audience groups—dubbed Lifestyle Categories—that lets advertisers zero in on specific people based on what content they look at from its publishers section, Discover, and Live Stories. For example, a sports retailer could target millennial guys who watch ESPN or The Bleacher Report’s Discover channel.

“Here, they’re stepping up and partnering with people to do this sophisticated demo targeting that folks expect,” said Sigel of WPP-owned Essence.”

3. Purchase intent & brand awareness

“Snapchat leans on Nielsen and Millward Brown Digital to run surveys  for advertisers that measure stats like brand lift, brand favorability and ad recall.

Snapchat cites recent fourth-quarter research from Millward Brown Digital to back up its measurement efforts. Snap Ads generated 1.6 times better purchase intent and brand favorability than the research firm’s averages. In brand awareness, Snap beat Millward Brown Digital’s average by 1.3 times.

Essence’s Sigel said that the agency created its own feedback tool that cuts the turnaround time for survey results by half, but added, “The more data, the better.””

4. Conversions

“While film studios and entertainment brands were early testers of Snap Ads as a way to grab the attention of cord-cutting millennials, Snap needs solid data to prove that its ads work for big, sales-minded retailers and packaged-goods brands.

So, it has a deal with Oracle Data Cloud, which matches offline data that retailers collect about consumers’ shopping products—for example, a supermarket loyalty card—with relevant Snapchat advertisements.

Snap also tracks how many people went to a location after seeing an ad on their phone through a program called Snap to Store that Fetch’s Taralli finds particularly intriguing. “Snapchat’s in a really unique place with filters,” he said. “We can do things with some of our ecommerce clients and brick-and-mortar stores [to] show ads and then offer geofilters around that client’s stores. [We can] see if a user is actually visiting these stores and if they’re opening Snapchat in the store.””

5. App-install performance data

“Snapchat is taking a page from Facebook’s playbook by investing in app-install ads that have made the latter a fortune in mobile revenue.

App-install campaigns are priced on a cost-per-thousand-impressions (CPM) basis, with auction-style bidding that uses machine learning and audience segmenting to determine which people are most likely to interact with ads. Fetch’s Taralli buys a lot of app-install ads and explained that he can use a third-party tracking tool to see if a consumer buys something from an app installed thanks to a Snapchat ad campaign.

“Snapchat is now integrated with most mobile attribution tracking partners out there, so [that’s] a lot of data,” Taralli said. “When it comes to doing [direct response], people showing up to stores, app installs, these tools are 100 percent necessary.””