Social Media

Snapchat users grow, and advertisers take heed

More advertisers flocking to Snapchat
More advertisers flocking to Snapchat

With a reported valuation of at least $15 billion, Snapchat ranks at the upper echelon of the most highly valued private U.S. technology start-ups. Now, more brands are eyeing the disappearing photo- and video-sharing platform as a place to advertise and engage consumers.

For its recent Small Business Saturday campaign, American Express purchased a one-day filter option for users to place over Snapchat photos. The effort was a combination social media campaign and brand booster that encouraged users to support local businesses and share their experience with their friends.

This was the first year AmEx worked with Snapchat and a company representative told CNBC that "while we don't have specific metrics to share, we are pleased with the level of engagement we saw with the filter this year." Snapchat did not respond to several requests for comment.

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Meanwhile, a growing number of advertisers are flocking to Snapchat, which has seen breakneck user growth. The platform's Discover section is teeming with big name brands visible to its more than 200 million active users.

The Discover feature allows short video ads to be placed in the middle of news video, and includes sponsored filter and geotag locations. Walk into a McDonald's, for example, and a Snapchat user can access a specialized McDonald's themed filter on their phone, only available if they're physically in one of the fast food chain's restaurants.

According to Debra Aho Williamson, a social media analyst at digital marketing firm eMarketer, Snapchat's recent uptick in use and interest from big companies comes from its strong command over a user's attention: It forces a user to view one screen at a time.

"While we're seeing a lot of young people use Instagram, they're also using Snacphat for one-to-one interactions, and that's different than what you can get on Instagram," she told CNBC.

'So much value to provide'

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Snapchat's popularity has helped change the fortunes of people like Harris Markowitz, who had a job connecting social media influencers with brands before realizing he could get in on the game, by becoming an influencer himself.

He left his job at Niche, the social talent agency owned by Twitter, and began creating his own content for companies like Coca-Cola, where he'd appear in videos on the beverage giant's own Snapchat account.

"There's so much value you can provide," Markowitz told CNBC of Snapchat. "It's not intrusive, like ads you see elsewhere when you're scrolling a feed that ultimately feels like it's polluting the content you're looking at."

Now, Markowitz has his own company, A Cereal Production, which aims to produce high-quality content for advertisers using Snapchat, while developing social media platforms that brands may want to work with.

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Yet a recent study by eMarketer actually ranked Snapchat fairly low among its competitors. The study — which asked executives from nearly 30 companies to rate properties like Facebook, Twitter, LinkedIn, Instagram, Pinterest and Snapchat, on several factors — found that Snapchat lost ground to Facebook and Instagram.

Facebook earned the highest marks in most categories including creative capabilities, measurement and analytics, and building brand awareness, according to the study. It was also the only platform that earned a an "A" grade in ad targeting. Meanwhile, Snapchat, which scored a "B" rating in the study, appeals to advertisers hoping to find more creative and robust options.

However, Snapchat has defended its ability to create intimacy with a user, allowing them to choose to engage with advertisers. Last year, its CEO, Evan Spiegel, wrote in a blog post, "We want to see if we can deliver an experience that's fun and informative, the way ads used to be, before they got creepy and targeted." That approach contrasts with Facebook's more aggressive approach, which has been faulted for operating in a way some describe as intrusive.

Snapchat's relative youth — the company has only been around for a few years — means it is still a relatively new platform for advertisers.

"While the measurement and targeting capability are getting better, they aren't nearly as robust as what you might get with Facebook or Twitter," Williamson said of Snapchat. "Advertisers are willing to experiment because Snapchat's audience is so intriguing, but they definitely want more," she added.

As Snapchat grows, it's not just brands and influencers hoping to get in the game. For Markwotiz, it's about creating and growing his own company in a way that some have used YouTube to create their own personal brand and viable business model.

"Instead of just being an influencer, I wanted to build a company that was predicated on all the values that I had while creating stories for Coca-Cola," he said.

"I understand the business side of it and want to build a company that can produce high-level Snapchat stories and hopefully one day, be the Miramax of Snapchat," he said, referring to the Hollywood movie studio.