“If I’m a company and my target demographic is 21 and under, I would spend every marketing penny on Instagram (FB), Snapchat and Musical.ly right now. It would be a grave mistake to neglect them.”
That’s according to tech entrepreneur Gary Vaynerchuk.
This week, Snapchat announced it would be launching Snapchat Partners, its first advertising app programing interface (API) that will connect marketers to creative and advertising partners.
And Vaynerchuk’s creative and production agency, VaynerMedia, is the only firm that will provide both ad tech and creative services to Snapchat, which is inching towards a $1 billion benchmark and an eventual IPO.
The API will only be used for seven-second advertisements that will be conservatively placed between your friends’ stories; you can skip them just by tapping your screen — like you would to skip a friend’s story.
Vaynerchuk says the partnerships came about organically, primarily because VaynerMedia had an existing relationship with the social media darling for a little over a year.
“It wasn’t anything super glamorous — we’ve done direct purchase order buys, including live story events with companies like General Electric and Mountain Dew. I don’t know if it’s a leg up to be a partner in both categories, but it’s certainly flattering,” he told Yahoo Finance. “Snapchat had told us that the API was coming and we had clearly demonstrated as a creative and media partner that we get it, so it was a natural fit; it was pretty much a non-conversation.”
It’s no secret that Vaynerchuk has been personally bullish on Snapchat (as seen on his personal social media accounts), but he says this decision is purely business.
“Our company’s relationship with Snapchat goes far beyond my personal enthusiasm,” he says. “I could be a fan all I want but if we didn’t have clients like Dove, Toyota and Budweiser, I don’t think Snapchat would have teamed up with us.”
In fact, Vaynerchuk says VaynerMedia’s relationship with Snapchat was predicated on the fact that “there weren’t a whole lot of people in the agency world as bullish as we were two years ago.”
How will Snapchat measure and monetize its insane reach?
Though Vaynerchuk was quick to see value in Snapchat as an advertising venue, others have been slightly more hesitant to jump on the bandwagon, citing the difficulty in measuring the effectiveness of campaigns on the app.
But Snapchat is taking action to provide those metrics to advertisers. On Wednesday, Snapchat announced a partnership with Oracle (ORCL) to measure the impact of digital advertising in the physical world by tracking incremental store sales that result from marketing campaigns on the app. Oracle found 92% of ads for consumer packaged goods led to higher in-store sales.
“This is a huge step in closing the post-click loop and will show advertisers to what degree their campaigns are successful,” says Mike Proulx, EVP and director of digital strategy and tech innovation at marketing agency Hill Holliday.
Additionally, Snapchat has partnered with 10 firms — including Nielsen mobile Digital Ad Ratings, Google’s DoubleClick and Millward Brown — to gather the metrics advertisers demand.
Still, Vaynerchuk says he’s “stunned that people don’t understand” that social media apps are where advertising needs to be focused.
“I’ll even give them a pass on missing out on the opportunities with Facebook,” he says. “But you have to be lacking common sense to see that’s what’s going to happen.”
TV vs. digital
With 150 million daily users on the app, Snapchat has the kind of magnitude that is unimaginable to TV networks.
Take a frequently used example: Taco Bell’s (YUM) Cinco de Mayo lens reached 224 million people on Snapchat.
“Compare that number to a hit TV show. Network execs would say their show is successful if they reach 5 million viewers,” Proulx says. “I never thought I’d be saying this, but in 2016, social media has become mass media. It has the kind of reach that traditional media won’t ever have.”
Despite this hype surrounding social media advertising, Proulx says TV remains the No. 1 driver of purchase behavior for millennials. For now.
According to a new report by IPG’s Magna Global, US advertising sales will match TV sales for the first time this year — both $68 billion. Director of global forecasting Vincent Letang expects digital media to surpass TV to become the No. 1 media category globally by next year.
Within digital advertising, mobile ads and social formats on platforms like Snapchat and Instagram will dominate while banner sales will decline, according to Letang.
But just as digital is becoming heavily dependent on social apps, television is all about streaming. The lines between video and TV are blurring, as consumers increasingly “watch TV” online.
Bottom line: user happiness
But Vaynerchuk is optimistic that advertising will only grow more creative and and innovative on platforms like Snapchat, as users become increasingly wary of typical advertising.
“What people like Evan Spiegel and Mark Zuckerberg seem to understand is that your users really are the most valuable thing in the world,” Vaynerchuk says. “The bottom line is to figure out what makes users happy. And users are happy on Snapchat.”
And CEO Evan Spiegel wants to ensure that it stays that way. At last year’s Cannes Lions, he noted, “We care about not being creepy. That’s something that’s really important to us.”
But Proulx says that creepiness, to a certain extent, is what has allowed other social media behemoths to ace the API game.
“The successes of Facebook, Twitter and Instagram’s programmatic advertising is they have been able to hyper target and personalize based on the individual consumer’s journey and habits,” he says. “Users and advertisers alike will await to see whether Snapchat will be able to make advertising personal, meaningful and relevant without becoming too generic.”
Melody is a reporter at Yahoo Finance, covering startups and social media. Read more:
