- Snapchat announced a new advertising product called Dynamic Ads. It brings automated customization to ads and is designed to make it easy for brands to set up their e-commerce business on Snapchat.
- Snap first introduced Dynamic Ads in 2019 to e-commerce retailers in the U.S and began testing the ad unit last October.
- The stock was down 1% after the company launched Dynamic Ads in the U.K, Europe, Australia, and the Middle East after being offered only in the U.S.
- Google and Facebook both offer brands Dynamic Ads.
Snapchat Dynamic Ads or Dynamic Product Ads (DPAs) allow a brand to automatically create ads in real-time based on their own product catalogs which may contain hundreds of items. This means if a price or availability changes, ads will be updated automatically with less human intervention. Dynamic ads will make selling products easier for retailers and brands and can serve Snapchat’s 229 million daily active users based on their interests. Snap offers five templates to advertisers to showcase their products in a way that they look native.
Here is the example of the template after a product is populated:
Brands like Adidas, FarFetch, and Topshop were amongst the first brands to test Snapchat Dynamic Product Ads and all reported positive sales results from showcasing their products and services through customized ad formats.
In the wake of the COVID-19 pandemic, Adidas has further accelerated its digital business and eCommerce is their key focus in 2020. Adidas test in Europe elicited positive feedback:
“We’re excited to beta test Snapchat’s Dynamic Ads in the U.K., Germany, France, and the Netherlands. Within weeks we saw a 52% growth in ROAS (return on advertising spend) and we have subsequently grown our investment.”
“The launch of DPAs allows us a route to reach our target Gen Z and Millennial audiences with relevant product creative throughout the consumer journey.”
– Rob Seidu, Sr. Director of Media Activation, Europe
FarFetch chief marketing officer Gareth Jones said that there is a shift in consumer interaction with eCommerce as consumers are increasingly shopping on their mobile phones during the COVID-19 lockdown which is expected to continue. Jones added that Snapchat Dynamic Ads have transformed the brand’s activity across the entire sales funnel.
“We lent heavily into DPAs during the testing period and we have seen significant success that has translated into high-quality customers and ultimately transactions. We plan to continue to build on our relationship with Snapchat and we see them as an always-on partner.”
Topshop was the first brand to do a beta test and it achieved four times the UK benchmarks for ROAS within two weeks. According to Topshop,
“DPAs have allowed Topshop to reach Snapchatters with high-quality, and relevant ads throughout the consumer journey, and based on such strong results, the activity will be scaled and launched into further markets over the coming weeks.”
Implications on Business
Lockdown has forced many businesses to shift their focus to eCommerce and keep up with consumer demands. According to Interactive Media in Retail Group, online sales reached a 10-year high in April, marking a year-over-year increase of 23.8%.
Snap reported revenue of $462 million in the first quarter, up more than 44% over the first quarter of 2019 and ad revenue grew as they relied on big-spending large advertisers.
According to Ed Couchman, general manager of Snapchat U.K,
“The coronavirus has accelerated the need for businesses to look at their digital sales channels and encouraged them to be more innovative in how they do that.”
“Since we opened up the beta testing I was impressed at the number of businesses who wanted to get involved – far above what we expected – which really shows the appetite for brands to get on board with e-commerce.”
“We are seeing strong results from advertisers in multiple sectors from high street clothing stores to food delivery who have been testing the product.”