American photo and video messaging start up Snapchat has big plans for 2016 and the pans revolve around its ad business.
With more and more revenues coming from this business, especially for companies such as Facebook and Google, Snapchat has been working its way up this ladder and it seems a new approach will just do the trick. The startup wants to make it a lot easier when it comes to buying and targeting ads.
The company is currently valued at $16 billion yet it cannot sell enough of its ads in order to turn them into significant profits.
A new ad-focused Snapchat API coming this year
One way the company wants to take care of this problem is to come up with a new API that is aimed at making it easier for advertising businesses as far as buying ads with more precision and frequency are concerned.
Snapchat has a user base of 100 million daily users who exchange more than 6 billion videos every single day. If the company were to find a better way of leveraging the power of the video in the current world, it would mean more profits. The startup boasts of a young user base that has seen major companies such as Nike and Coca-Cola eager to part with up to $500,000 just to air a single ad to the huge audience of the app.
Quality over volume
It is time for Snapchat to make a major decision on how it delivers its ads. No one can disagree that the hands-on and relationship-based approach to ad sales that the company has taken over its course of doing ad business has paid off so far. There are better quality ads on the app yes, but the volume of ads is affected by this focus on quality. In its defense, however, the company’s VP for communications Mary Ritti recently said that the present aim is to build long-lasting relationships with major brands.
Snapchat seems to be following in the footsteps of Twitter and Facebook, who already have APIs for these purposes. What a new API would mean to this messaging app is that advertising companies can finally get to build Snapchat compatibility to the systems they are currently using to buy and target ads. As a result, the volume of ads available on the app will shoot. As far as ad targeting is concerned, advertisers will be able to make use of new ways of targeting consumers other than the current age, location and gender.
Snapchat began the ad business back in October 2014 and as of now, there are three types of ads namely sponsored ads, short videos on Discover network and 10-second videos featured in Live Story.
Despite the news of Snapchat working on new ad-focused APIs, we might have to wait for months before seeing this update come to life. Nonetheless, it will be interesting to see how this company battles it out against household names in the industry such as Facebook and Google, among others.