Snap wants investors to know that monetization is and will continue to be a top priority.
At the company’s first investor day event on Tuesday, executives emphasized Snap’s focus on investing in its ad stack, expanding into new international markets and growing its advertiser base, including small and local businesses.
After revamping its self-serve ad platform over the past couple of years, Snap is now in a position to drive multiple years of more than 50% revenue growth, said Peter Sellis, the exec in charge of developing and growing Snapchat’s suite of ad products.
Snap’s stock popped on the news.
But it’s been a long journey to get to this point, Sellis said.
When Snap first started monetizing, advertisers mostly saw it as an experimental buy that required custom creative, like vertical video and expensive one-off lenses and filters.
Around 2017, Snap launched its Ads Manager and shifted the buying model from insertion orders to programmatic. Later, it expanded the bidding types on offer, including app installs, video views and web traffic.
Over the course of two years, Snap went from 90% managed service to 90% self-service and started 2020 with the majority of its revenue coming from direct response advertisers.
To make sure brand advertisers weren’t being left behind, Snap started rolling out a set of self-serve tools with brand buyers in mind, including reach and frequency options and the ability for advertisers to reserve prepackaged Discover buys at a fixed CPM rate through Ads Manager.
And in October, Snap launched its First Commercial product, which allows certain partners to reserve the first commercial a user sees in a given day on a self-serve basis.
“Our team remains uncompromisingly focused on building a platform that works for advertisers of all types and sizes,” Sellis said.
Next, Snap will continue investing in its monetization stack, including adding more goal-based bidding options and tapping still nascent ad markets worldwide with localized sales and support teams, regional intelligence and in-market B2B marketing outreach.
Snapchat’s core demographic of 13 to 24-year-olds represent more than half a billion smartphones, and rest-of-world has been Snapchat’s largest driver of recent user growth. But Snapchat’s daily active users still represent just 4% of the overall ROW opportunity, said Snap CFO Derek Andersen.
But even though Snapchat reaches more than 90% of 13 to 24-year-olds in its most penetrated ad markets, such as North America and Western Europe, there’s still a big opportunity to ramp monetization and grow average revenue per user there.
“If you compare our ARPU and audience size to more mature platforms … we still have a long way to go to realize our full monetization potential,” Andersen said. “North America alone holds enough opportunity to keep our topline growing at an attractive rate for years to come."