Coronavirus - we're here to help
From how to access your account online, scam awareness, your wellbeing and our community we're here to help.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log in to HL Account

Snap's longstanding pitch as a safe haven for brands is paying off as advertisers boycott Facebook

It's been on an ad sales and user growth tear, leading its stock price to the highest level since its 2017 IPO.

Article originally published by Business Insider. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

  • Snap CEO Evan Spiegel has long pitched his company as the anti-Facebook, and it appears to be paying off as some advertisers fleeing Facebook plan to spend more with Snap.
  • The app positions itself as a more positive platform that's safe for advertisers.
  • It's been on an ad sales and user growth tear, leading its stock price to the highest level since its 2017 IPO.
  • Some, however, remain skeptical about Snap's ability to siphon ad spending away from Facebook in the long-term.

Evan Spiegel stood on a virtual beach at Snap's 2020 partner summit in June and shared a key number with thousands of marketers: 75%.

That's the share of 13- to 34-year-old Americans use the app every day, according to the CEO — more than Instagram and Facebook. He also said the company's 100 million total US users is higher than Twitter and TikTok combined.

Just days before some of the world's top advertisers like Coca-Cola, Ford, and Starbucks began boycotting Facebook for not doing more to combat hate speech, Spiegel described Snap as a source for "timely, accurate content" and a place where users can share the "love we have for one another."

Snap has stuck with its plan to be the anti-Facebook

Snap's stock price has soared by 40% this year, surpassing its March 2017 first trading day price of $24. Its first quarter revenue leapt 44% year over year, to $462 million. Daily active users are growing, too, up 20% year-over-year in the first quarter to 229 million users.

Ad growth has followed. David Roter, Snap's VP of global agency partnerships, told Business Insider that advertisers had committed twice as much money to Snap in 2020 than they did in 2019.

"That type of momentum is a tangible sign that we've become a core part of many large advertisers' strategy," Roter said.

And now, according to an executive at a major agency, who is known to Business Insider but requested anonymity to speak openly, Snap executives were readying a pitch for clients last week if they decided to boycott Facebook.

Snap has long positioned itself as the anti-Facebook, safe for both teenagers and advertisers, by highlighting the positivity of its user base in an attempt to transcend early reports of explicit content. It has also largely avoided the privacy controversies surrounding platforms like Facebook and TikTok, though reports emerged last year of employees abusing an internal tool to access user data.

Some media executives remain skeptical of Snap's safety claims and its potential to approach Facebook's scale and performance. But the company's work finally seems to be paying off.

"The platform has come a long way in the last 18 months," said Duane Brown, founder and head of strategy at e-commerce agency Take Some Risk. "When we have extra money or we want to move budget off of Facebook and Instagram, it's one of the first places we'll go."

Some Facebook advertisers are putting more money into Snap

Advertisers said Snap stands to benefit from the Facebook boycott after gaining steam with marketers over the past year under chief business officer Jeremi Gorman.

"So much of the frustration around Facebook is pent-up anger from years worth of scandals and challenges — we love when there are other platforms that can provide incremental gains," said Mike Mother, CEO of WPromote, a performance ad agency that works with small and midsize marketers.

Snap has evolved its ad pitch over the years. It's long sold direct-response ads that compete with Facebook ads. In its latest effort to capture more e-commerce dollars, the company released an ad product last month that automatically updates product prices and availability.

Michael Levine, senior analyst for the internet and media at Pivotal Research Group, said Snap has made two major shifts over the past year and a half: Moving from one-off ad buys to an "always-on scenario" for brands and revealing, during April's first quarter earnings report, that 50% of revenue comes from direct response.

Two executives at holding company-owned media-buying firms, both of whom are known to Business Insider but requested anonymity to speak openly, said their clients have been spending more on Snap despite the pandemic and that Snap has moved from many marketers' so-called "experimental buckets" to become a more regular source of spending in the past year.

Savannah Sanchez, an advertising consultant that runs Facebook, Snap and TikTok ads for advertisers like eyelash brand Doe Lashes, said that the focus on e-commerce is making Snapchat a bigger buy for advertisers wanting to reach young people.

E-commerce brands that target Snap's young users spend 50% of their budgets on Snapchat and the other 50% on Facebook. For brands targeting older consumers, Snap budgets drop to 10% to 20% of total budgets while Facebook gets a larger share, she said. 

Some ad buyers remain skeptical that Snap can replace Facebook

Ad execs said unlike the Facebook news feed, where it's hard for advertisers to avoid offensive content, Snap's Discover section includes only content approved by Snap's editorial team or from publishing companies.

One executive said there are limits to brand safety on Snap, though, since ads can still run before or after objectionable user content where advertisers are limited in their control over placement.

The exec also said when it comes to scale and targeting, Snap is more comparable to Twitter than to Facebook.

And while Snap is well suited to advertisers aiming at its core users of young people, advertisers needing to reach a wider audience will find it limiting.

"The nature of Snap limits the amount that they can profit off Facebook's misfortune," said one exec. 


This article was written by Patrick Coffee from Business Insider and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Business Insider. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Free news email alerts

  • Daily and weekly news
  • Major Publishers
Register