Monetizing short videos and exploring conversational AI advertising, Snapchat's commercialization begins to accelerate

In 2023, competition among global technology giants in the field of generative AI will continue to intensify. In April, the overseas social media giant Snapchat announced that its generative AI chatbot My AI will be open to all users around the world. Recently, it has launched a new event in NewFronts Digital Marketing in New York. At the conference, it was announced that it would start testing commercial promotion links in My AI, becoming the first social platform to fully open generative AI products and test advertising monetization.

In addition to AI, the commercialization of short videos is also another major direction that major manufacturers are actively planning in 2023. Especially in the context of TikTok possibly facing a ban in the United States, various manufacturers have made new moves.

Although European and American manufacturers are slightly behind domestic manufacturers in the short video track, they are still tempted by the huge commercialization potential. According to eMarketer, global short video ad spending will reach $98 billion in 2023 and will further grow to $225 billion by 2028.

Global short video advertising expenditure from 2022 to 2028 (unit: billion US dollars)

However, looking at the development paths of major short video platforms, commercialization is not achieved overnight. TikTok was launched in the United States in 2017, and it was not until 2020 that it officially launched its advertising business. After that, players such as Meta, Snapchat, and YouTube entered the game one after another, but the progress of commercialization varied.

The launch time of major overseas short video products

Recently, TikTok announced that it will launch new advertising products to expand the scope of creators who can participate in sharing, while Snapchat and Meta also announced updated advertising products at the recent NewFronts Digital Marketing Conference. The commercialization of short video platforms seems to be entering a new stage. As Meta and Google advertising prices rise, advertisers are looking for new purchase channels. At this time, the commercial layout of short video products by major social media companies like Snapchat, which covers young users around the world, may give the industry Bring new life.

Short video commercialization competition is fierce, Spotlight is still a blue ocean

Major manufacturers are strengthening the commercialization of short videos, but the stages are different

Among the major manufacturers participating in the short video track, TikTok, YouTube Shorts, and Reels are obviously the players making the fastest progress in commercialization. Looking back at the development history of several platforms, we will find that the routes of several platforms are basically the same, "creator funds are launched → advertising products are launched → creators share advertising."

Among them, the third stage of "advertising sharing with creators" is a relatively long process. Whether it is TikTok, which started advertising sharing earlier, or latecomers Reels and YouTube Shorts, creators pointed out that "the sharing is too little." ". Take YouTube Shorts as an example. One month after its creator sharing rules were launched in February this year, some creators reported that the RPM (advertising revenue per thousand impressions) was only 0.02 US dollars. Some users said that the income after advertising sharing was still Less than half of the previous income from Shorts Fund.

The short videos of several major companies, especially latecomers YouTube and Meta, are slightly "shabby" in terms of advertising share. In fact, to a certain extent, this reflects that the form of short videos is limited by the length of the video and has less advertising space. This aspect is slightly insufficient compared to long videos.

It is also for this reason that several major manufacturers have recently made updates to their short video ads. TikTok has expanded the scope of creators who can get a share, and Reels has launched AR ads, etc., all with the purpose of enhancing the effectiveness of short video ads. effect, thereby increasing the activity of the delivery.

Among many players, Spotlight, the fast-growing short video platform owned by Snapchat, has finally made a big move in commercialization recently.

Snap finally decided to “monetize” its 350 million short video monthly active users

Snapchat’s Spotlight short videos were launched in 2020. Previously, in order to ensure user experience, ad monetization has not been launched as quickly as Reels and YouTube Shorts.

At the recent NewFronts conference, Snapchat finally announced the Spotlight advertising product - Ads in Spotlight. The author believes that there are two main reasons for choosing to launch short video advertising products at this point in time.

First of all, the number of users and activity of Spotlight has reached a considerable scale and has reached the stage of commercialization. Snap’s latest quarterly financial report shows that Spotlight’s MAU reached 350 million, a year-on-year increase of 46%, while Snapchat’s total MAU is 750 million, which means that nearly half of Snapchat users are using Spotlight every month Watch short videos, and the cumulative viewing time of Spotlight increased by more than 170% year-on-year in the first quarter.

Secondly, Generation Z users on Snapchat have demonstrated very strong purchasing power. According to data from Snap’s first quarter financial report, Snapchat’s subscription service Snapchat has gained more than 3 million paying users in less than a year since its launch. In sharp contrast, according to Information, as of February this year , Twitter Blue, a Twitter subscription service launched a year before Snapchat, has less than 300,000 paid users. Although it may have something to do with whether the rights and interests corresponding to the subscription plan are reasonable, it has to be said that the paying ability of Snapchat users this time is quite surprising.

Generally speaking, a new advertising product itself has a dividend period. For example, when Meta followed Snapchat and launched Stories, its delivery cost was lower than other advertising slots, but the effect was not bad. Spotlight users are highly active and have strong paying ability. Overseas companies can pay attention to a wave of Spotlight advertising opportunities.

Spotlight short video is located on the far right of the five major platforms of Snapchat

Currently, the format of Spotlight ads should be similar to TikTok, YouTube Shorts, etc. Ads placed by advertisers in Spotlight will be embedded in carousel short videos.

After the advertising product is launched, Spotlight will also start to share advertising with creators like short video platforms such as YouTube Shorts and Reels. Judging from the situation of products like Stories that have begun to share advertising with creators, Snapchat is relatively strong in advertising sharing with creators, and may bring quite a "surprise" to creators.

Hannah Stocking, a popular comedian abroad, has a large number of fans on multiple social media platforms. After participating in the Snapchat advertising revenue sharing program, she earned $30,000 in 72 hours by publishing exclusive content on Snapchat. Now Snapchat is her highest paid and favorite social platform. “I have 28 million fans on TikTok and 24 million fans on Instagram. Although I only have 935,000 fans on Snapchat, overall, Snapchat has become my highest-earning social platform.”

Another creator Adam Waheed also said that Snapchat is his favorite platform, and he earns an average of about $1,500 a day from ad sharing.

At the same time, Snapchat continues to increase revenue for creators through product and reward system updates. At the Snap Global Eco Partner Conference (SPS) in April, Snap announced the Stories revenue share program and the Spotlight reward program. Advertising is embedded to provide continuous income returns. The purpose of the latter plan is to increase the overall reward amount for short video creators. It can be seen from these measures that Snapchat currently attaches great importance to increasing the income of creators on the platform.

Snapchat launches more new advertising and marketing products, focusing on AI precision marketing, influencer marketing, and strong brand exposure

At this NewFronts, in addition to Spotlight short video ads, Snapchat also launched a number of updates around advertising marketing. To sum up, the author believes that it mainly focuses on three keywords: AI precision marketing, Internet celebrity marketing, and strong brand exposure.

AI precision marketing: My AI takes the lead and adds generative AI to advertising

Some time ago, there was a heated discussion about how generative AI will change search advertising. However, over the past few months, major manufacturers have still held a relatively conservative attitude towards the introduction of advertising in generative AI. Some time ago, Microsoft Bing announced that it will cooperate with third-party merchants and appear in conversations with users in the form of plug-ins. However, it is still in the testing stage and not many merchants have reached cooperation.

At this NewFronts, Snapchat announced that it will add merchant promotion links to the generative AI chatbot My AI, taking the lead in commercializing generative AI. My AI can help the platform understand Snapchat user preferences and improve the relevance of recommended content while protecting user privacy. For example, when a user discusses tonight’s dinner with My AI, My AI may reply with a promotional link to a local restaurant or takeout app.

The advantages of combining generative AI with advertising are obvious. Since the promotion link is pushed by My AI based on the needs expressed by users in the dialogue with users, it is more in line with the current needs of users. From a brand perspective, it can also be more effective. Accurately reach target users who are truly interested in them.

Snapchat, which has always been good at innovation, is also very fast and advanced in AI integration this time. However, Snapchat emphasized that this feature of My AI promotion links is still in the early experimental stage, although it has seen some good performance in tests.

Influencer Marketing: Provide one-stop creator cooperation services, paired with a professional content production team

One of the reasons why Snapchat is loved by many young users overseas is that there are many fun and popular AR filters on the platform. However, because the Snapchat platform itself is mainly a relatively closed social network among acquaintances, these popular AR filters Instead, the mirror is spread on other open social platforms such as TikTok, and some can even be transmitted back to domestic Douyin, such as the crying face filter that became popular last year.

But with the rapid development of non-acquaintance social products such as Snapchat’s own Spotlight short videos and Public Stories, while Snapchat is firmly established in acquaintance social territory, it is also further expanding the field of open social interaction. The creator ecosystem that Snap is currently promoting is a good example and makes it easier for brands to work with these creators.

At the NewFronts conference, Snapchat announced the launch of a creator collaboration platform (Snap Star Collab Studio).

Snap The function of the creator cooperation platform is to improve the efficiency of docking between brands and creators and promote cooperation between the two parties. According to reports, the platform can provide brands with one-stop creator services, including creator screening, cooperation, effect output and other links. Its functions are similar to the Creator Marketplace launched by TikTok, Meta, etc. When the content ecology develops to a certain extent, Afterwards, platforms that help brands connect with creators become even more important.

In addition, in order to help brands promote cooperation with Snap creators more smoothly and efficiently, the Snap creator cooperation platform has also reached cooperation with content production teams such as Studio71, Beeline by Brat TV, Influential and Whalar. These partners have experienced production teams that can assist brands in communicating advertising and creative needs with Snap creators, and ensure efficient content production and execution.

There are already brands testing this feature. For example, the beauty brand NYX Professional Makeup, with the help of the Snap creator cooperation platform, has achieved a return on advertising expenditure of more than 13 times, and has performed outstandingly in customer acquisition. Data shows that 90 % of sales growth is contributed by new users to the brand.

Strong brand exposure: First Story’s daily video advertising reaches an average of 50 million potential users in the United States

Prior to this, Snapchat has launched two sponsorship advertising products, First Commercial and First Lens, which respectively allow advertisers to place the first Commercial video ad that Snapchat users see that day (the first 6 seconds cannot be skipped) and The first AR filter advertisement. It can be seen that both advertising products tend to "build momentum". Advertisers pay on a daily basis. The main purpose is to obtain higher advertising reach rates and strong exposure in the short term, attracting a large number of users to pay attention to the brand.

Luxury brand LV’s First Story sponsorship video ad on Snapchat

This time on NewsFronts, Snapchat officially announced a new member of the “First Family” – First Story. As the name suggests, First Story is the first video ad that Snapchat users see when browsing their friends’ Stories that day. According to Snap, in the United States, First Story’s daily potential video ads alone can reach 50 million users.

First Story The purchasing method of Baotian determines that this advertising product is very suitable for the promotion of brand new products when they are launched. According to Snap, Warner Bros. will launch First Story globally to promote the upcoming new superhero movie "The Flash."

Conclusion

Compared with short video products such as TikTok and YouTube Shorts, Snapchat’s commercialization initiatives on the Spotlight short video platform came later. However, Spotlight’s rapid growth in user numbers in recent quarters and the consumption of Generation Z users on Snapchat The potential and Snapchat's emphasis on creator sharing make the commercialization of Spotlight full of possibilities. In addition to short videos, newly launched advertising products such as the beta version of My AI promotion links and First Story sponsorship video ads are also part of Snapchat's commercialization exploration of products with greater activity or greater potential on the platform.

It can be seen that Snapchat, which already has 750 million monthly active users, thanks to the richness of product functions, will have more uncommercialized products that can be opened to advertisers in the coming period. For brands, For example, seizing the bonus period of new advertising products that Snapchat is constantly launching will also be an important magic weapon to take advantage of the fierce competition in overseas marketing.

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