Snap Inc (NYSE:SNAP) Offering Discounts In Bid To Lure Advertisers

Snap Inc

Reports indicate that Snap Inc (NYSE:SNAP) is offering various incentives to advertisers for creative services. Specifically the disappearing-message company is offering discounts and other incentives with regards to the expenses brands incur while recutting ads in order for them to fit into Snapchat’s signature vertical format.

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According to various ad agency executives it was in Q2 and Q3 that advertisers were presented with these incentives. One executive at an advertising agency revealed that the disappearing-message company had been reimbursing the costs of recutting in situations where the total ad spend was more than $40,000. In these instances advertisers were receiving discounts of about 1% of the total ad budget.

Vertical ad format

“Basically, they are providing incentives in an effort to eliminate the friction between horizontal ad assets and its vertical format, recutting them so that they can run on Snap,” revealed the advertising agency executive.

A creative partner at Snapchat also acknowledged that the social media firm can make advertisements for clients at no cost if the ad spend attained a certain threshold. The creative partner added that this can be done by using third party vendors or the company’s ad design team. All that brands are required to provide is any media they may already have such as YouTube videos, raw clips or TV spots.

It is not unusual for platforms to offer such incentives to advertisers. Even Snapchat’s competitors including Instagram and Facebook Inc (NASDAQ:FB) offer such discounts. Platforms do this in the hopes that once they get a client to try out something they may like it and continue to spend in the future.

A case in point is when a motor vehicle manufacturer needed to try out video adverts on Instagram Stories. Since the available videos required to be resized, the additional editing costs were absorbed by Instagram. Snapchat’s incentives are coming at a time when the social media firm that went public only a few months ago needs to increase its ad revenues following an unimpressive second quarter earnings report.

On Wednesday shares of Snap Inc rose by 3.85% to close the day at $15.09.

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