Snap’s recent Q2 2024 earnings highlighted the ongoing progress in its direct response (DR) business. This progress has been driven by significant investments across three key areas of its advertising platform: larger machine learning (ML) models, improved signals, and more effective ad formats.
During Q2, these areas of focus contributed to a rapid increase in the total number of active advertisers on Snapchat, more than doubling year-over-year. Snap remains committed to driving performance for its advertising partners across the entire marketing funnel.
In today’s marketing landscape, it’s no longer sufficient to focus solely on either Direct Response or Brand Awareness. Marketers now require a broad set of solutions that cater to the full spectrum of the customer journey, both capturing and generating demand.
Snap’s recent product updates offer a range of solutions, from enhanced optimisation options that drive lower funnel conversions to new brand-specific ad formats that achieve cost-effective reach. These new products and improvements provide partners with compelling ways to engage with the Snapchat audience, and Snap is eager to share how savvy advertisers can benefit from a ‘better together’ approach.
Section I: Demand Capture (DR)
Lead Generation
Snapchat has introduced numerous product enhancements to its Lead Gen suite, making it a compelling destination for businesses of all sizes seeking to reach a unique and valuable audience. Recent improvements include integration with Zapier to automate lead reporting directly into CRMs, better signal usage to enhance lead optimisation and improvements to reporting latency and overall ease of use. These advancements have led to significant year-over-year gains, including:
- A 69 per cent reduction in cost-per-lead (CPL)
- A 62 per cent increase in lead form submission rate
- A 21 per cent increase in click-through-rate (CTR)
Improvements for App Advertisers
Snap has invested in improvements across the entire stack for app-based advertisers and introduced new bidding capabilities tailored to the mobile gaming category. They have expanded 7-0 optimisation to support app install, app purchase, and app re-engage purchase capabilities and have recently begun scaling these products with their advertising partners.
Encouragingly, several gaming app clients, including Roblox, have seen a 30-50 per cent improvement in ROAS on Snap.
Improvements for eCommerce and Web Advertisers
In May, Snap announced the testing of a Value Optimisation offering for app advertisers, allowing marketers to bid on the basket value of purchases driven. Early test results have been promising, particularly for mobile gaming and eCommerce advertisers. For instance, Lancôme, a beauty brand from L’Oréal, utilised Value Optimisation to achieve a 38 per cent increase in average purchase cart size and a 4.4x increase in ROAS.
Web advertisers are also seeing success with Snap’s recently launched Landing Page View optimisation, which has led to substantial improvements in site engagement and traffic quality. For example, Wrangler used Landing Page View bidding and saw a 34 per cent increase in CPM efficiency, as well as a 3.8x increase in platform conversions. This resulted in:
- A 212 per cent higher ROAS
- An 80 per cent improvement in cost-per-outcome efficiency
- Nearly a 50 per cent reduction in bounce rates
Section II: Demand Generation (Brand)
Improved Takeover Products
Snap recently launched new top-of-funnel takeover products for advertisers: First Lens Unlimited and State Targeted First Story.
For marketers utilising Snap’s industry-leading augmented reality (AR) technology, First Lens Unlimited is an enhancement to the previous First Lens product. This new, high-impact AR takeover offers the first impression of the day in the first slot of the Lens Carousel, plus unlimited impressions, frequency, and permanence in the next Lens Carousel ad slot. In testing, First Lens Unlimited has helped drive a 25 per cent – 45 per cent increase in incremental impressions for advertising partners. It is now available globally for all advertisers.
State-targeted First Story allows US advertisers to target First Story takeover campaigns to individual states or the entire country with different creative for each state, as chosen by the advertiser. This expands on the previous First Story offering, which was only available for targeting an entire country with one ad creative.
AR Advertising
AR continues to enable Snapchatters to express themselves in creative and engaging ways, fostering meaningful connections with their real friends. Snapchatters interact with AR Lenses billions of times per day on average, and sponsored AR offers marketers the opportunity to create unique, innovative experiences that measurably lift their brand campaigns.
Snap recently announced AR Extensions for businesses, extending AR advertising products beyond the camera to include all ad surfaces such as Dynamic Product Ads, Snap Ads, Collection Ads, Commercials, and Spotlight.
Overall, Snap has found that when marketers pair AR ads with video ads on Snapchat, their campaigns see a 1.6x higher Ad Awareness Lift on average compared to video ads alone. Research from Snap’s partners at OMD and Amplified Intelligence also found that Snapchat campaigns that include AR in their mix drive 5x more active attention compared to industry peers.
AR Extensions is currently in beta and will be rolled out globally in September.
ML and AI-Powered Creative Tools
ML is helping Snap create more engaging and entertaining Lens experiences, such as the ML Scribble World Lens, which was viewed over 1 billion times in Q2. At their NewFronts presentation, Snap announced that advertisers can now create their own Lenses using proprietary SnapML technology, and their AI-powered creative tools enable custom ML Lenses to be built in just a few days.
Generative AI is also assisting advertisers in simplifying and streamlining the creative process. Marketers can now use Snap’s new GenAI Copy Generator to create headlines with AI, which is particularly beneficial for brands looking to localise ad copy in non-English speaking markets.
As Snap moves forward, the focus will continue to be on larger ML models, scaled signals, and effective ad formats while leveraging AR as a powerful tool for brand-oriented advertisers. With many foundational elements of its advertising platform now in place, Snap looks forward to making continued progress in helping its advertising partners grow their businesses and optimise their campaigns for performance across the funnel.
