- Snap Inc. is asking big advertising firms like WPP, Omnicom Group, Publicis Groupe and Interpublic Group for ad-spending commitments this year totaling between $100 million and $200 million from each, according to reporting by The Wall Street Journal that cites people familiar with the discussions.
- The sums are approximately double or triple what was spent last year by the ad firms. Snap is also asking these companies to commit to having a presence on the platform all year or for multiple years, per the article.
- In other news, Snapchat is also letting marketers choose to plan and pay for ad campaigns on the app using Nielsen’s TV-like digital ratings, according to Ad Age.
In advance of Snap's plan to sell stock publicly for the first time, the company is moving quickly to lock in advertising commitments from major advertising firms, efforts that are likely being buoyed by putting in place third-party measurments from a well-respected firm like Nielsen. These moves suggest, unsurprisingly, that selling ads will be a major source of revenue for the public company. Google and Facebook both earn approximately 90% of their revenue from ad sales.
The size of the commitments is surprising given that Snapchat is still a relative newcomer whose potential for reaching consumers has not been proven beyond a single demographic group — millennials — and beyond promoting new products.
Snap is reportedly attempting to make the big ad buys more appealing by offering discounts on ad prices, advance access to new products and support in developing content, per The Wall Street Journal.
The Nielsen news points to the importance of cross-channel marketing and the growing role of video for Snapchat. "This is critical as we integrate video investments across offline to online. Enlisting an accredited third party is key to reporting measurements in an analogous manner across screens, especially as Snap pushes further into video," Douglas Rozen, OMD's chief digital and innovation officer, told Ad Age in an email.
Snapchat along with competitors like Facebook and Twitter have been working to make inroads into areas once the sole purview of TV, such as with original content from major media companies for Snapchat or live streaming destination viewing like sporting events on Twitter. By allowing advertisers use Nielsen’s ratings to determine the value of Snapchat campaigns, it provides those buyers already used to buying TV spots a familiar process and metric when shifting those ad dollars online.