For Snap, there are benefits to being a latecomer to ad tech.
The app, which entered the programmatic playing field last year when it launched APIs and self-serve tools that allow marketers to place automated buys on its platform, is avoiding many mistakes made by a predecessor that it's often compared to: Facebook.
“Snap has been replicating [Facebook’s] great road map, from opening the API to buying ad tech that complements its value proposition,” said Noah Mallin, head of social at MEC.
But Facebook first went down a different path before it launched its Ads API in 2011.
Like Google, AOL and Yahoo before it, Facebook’s initial strategy was to own the ad tech pipes surrounding its platform. That vision changed when Facebook decided it wanted to keep a tighter lock over its user data. It shut down the Facebook Exchange and supply-side platform LiveRail last May and converted its ad server Atlas into a measurement pixel in November.
All that change lead to chaos and confusion around Facebook’s ad tech strategy for a while.
But Snap, which just went public in March, is making early ad tech acquisitions that reflect the more sophisticated times in which it is growing up, said Shreya Kushari, SVP of search marketing and performance media at DigitasLBi.
Snap bought mobile search app Vurb, which improves user experience and adds keyword targeting to its platform. Creative execution tool Flite helps marketers make the rich media ads that Snap wants on its platform. And with its Snap to Store product and its acquisition of location-data company Placed, Snap has the opportunity to offer closed-loop attribution.
“Snap has learned from other media partners,” Kushari said. “It’s acquired an attribution company. That’s how far ahead it is in understanding how its data needs to be viewed in the market.”
When Facebook shut down its ad tech operation, it focused growing its user base and gaining scale by expanding Facebook Audience Network. Some buyers worry that Snap, which saw declining user growth rates in its first-ever earnings, won’t be able to scale without getting those rates back up.
But while it’s easy to compare competitors in the social space, Snap’s hardware acquisitions and investments from TV networks show it might be headed in another direction that doesn’t fully depend on user growth, said Jeremy Sigel, global director of partnerships and emerging media at Essence.
“I think this whole idea that Snap’s success hinges on growing its user base may not be true, because its business model is different from Facebook and Google,” Sigel said.
Snap launched its first hardware product, Spectacles, last fall. It’s since acquired augmented and virtual reality startups Cimagine and Obvious Engineering. And it’s even bought itself a drone-maker, Ctrl + Me Robotics. Meanwhile, the company has grown its hardware engineering team to 300 people from the likes of Apple, Google and Motorola.
Snap also has also become a big contender for mobile TV. The platform co-produces and streams original programming from major cable networks on its platform daily. NBCU invested $500 million in the company prior to its IPO in March.
“Given all the content and original programming they’re starting to produce, they’re not a social network,” Sigel said. “They’ve never been a social network. They’re morphing into something completely different. It wouldn’t be so hard for Snap to become much more similar to a Time Warner or Comcast.”
But competitive platforms like Twitter and Facebook are also gunning for TV dollars. And for now, Snap’s bread and butter remains digital ads. That means it needs to show consistent measurement and reporting across its ad products, said Carly Costantino, senior media director at SapientRazorfish.
“I don’t think there is a lot of consistency,” she said. “The products are each their own entity. They don’t talk to each other.”
DigitasLBi’s Kushari agreed.
“They need to truly show all the connection points, the value of the entire platform,” she said.
People are quick to forget that Facebook had questions looming over its ad platform in the early days as well, like how it would transform and monetize its platform on mobile, Sigel said. Snap has been much quicker to address gaps in its ad tech stack and hook up with third-party measurement partners, but its story as an ad platform is far from over.
“In 10 years, Amazon launched and went public as an online bookstore. Netflix went public as a DVD mailing service,” Sigel said. “Snap is moving incredibly quickly. Nobody really understands who it will end up being.”