Popular direct-to-consumer brands like Brooklinen, Curology, and MeUndies are flocking to Story Ads on Snapchat Discover as Instagram gets crowded and pricier

Business Insider | May 22, 2019, 10.19PM IST


Business Insider

  • DTC brands like Curology and MeUndies have started flocking to Snapchat's Discovery Story Ads, a branded tile format that shows up in a feed next to popular shows and publishers.
  • The format is suited to DTC brands because it lets them show their product portfolio and gauge consumer intent.
  • Snapchat has benefited as Instagram gets increasingly crowded and expensive for DTC brands.
  • Story Ads are also delivering for some performance-focused DTC brands.
  • Visit Business Insider's homepage for more stories.

Snapchat Discover is no longer just a content hub for publishers, creators and shows, but also a draw for direct-to-consumer advertisers.

DTC brands Brooklinen, Curology, and MeUndies told Business Insider that they have increased spending on Story Ads, branded tile ads that show up in the Discover feed alongside popular shows and publishers. MeUndies, for example, is using the ads to promote its new llama-themed underwear, onesies, and socks.

Business Insider also spotted other DTC brands running Story Ads in Discover in the past week, including Away, Fabletics, InstaCart, and Quip.

Read More: Advertisers have long considered Snap to be an experimental buy. Fresh data suggests that's beginning to change.

"Snapchat is an increasing focus for us as it becomes a more sophisticated ad platform," said Grace Lawrence, associate director of user acquisition at skincare brand Curology.

Discover Story Ads are non-intrusive and opt-in

Snapchat has a variety of ad formats, from fullscreen vertical video ads called Snap Ads to interactive AR Lenses. The Story Ads, which rolled out in April 2018, let advertisers share a collection of three to 20 images and are suited to promoting product collections.

Some DTC marketers said they like Story Ads because they showcase products well, have prime real estate alongside popular shows and publishers, and can show consumer intent because they call for users to click on them.

"Story Ads on Discover are unique because they allow us to tell our story and build trust, while converting users more naturally," said Curology's Lawrence.

"Discover tile Ads provide us with more space to tell our story with richer content; we can feature several prints or multiple product categories," said Becky Velazco, senior brand and corporate communications manager at MeUndies.

"The person who clicked on that tile has shown intent - they are interested in MeUndies," said Velazco. "In comparison, Snap Ads only pop up in between friends' stories, so it's more random."

Story Ads are delivering results for some DTC brands

DTC brands tend to be performance-oriented, and Story Ads are delivering on their desire for ads that get users to take an action, some marketers said.

A recent Mother's Day campaign that agency Social Outlier ran on behalf of a client saw more than 25% of people click on and view the client's entire collection, said David Herrman, advertising director at Social Outlier. He also estimated that return on spending for Snapchat's Story Ads tend to be 0.30-0.50 times higher than that on Snap Ads.

Story Ads outperformed other Snapchat ad formats for Brooklinen and MeUndies, according to those companies.

Snap's fullscreen vertical video ads didn't work for MeUndies, said Velazco. The brand wouldn't share specifics, but has been hitting its KPIs with Story Ad tiles on Discover and has shifted most of its Snapchat spend toward it, she said. Brooklinen has also increased its Snapchat spend by five times since November 2018, with the bulk of it going toward Story Ads on Discover, said Elliott Mustoe, the brand's growth marketing analyst.

DTC brands are looking elsewhere as Instagram gets saturated

DTC brands built their businesses online, especially Facebook and Instagram. Instagram still controls the lion's share of DTC ad budgets because it allows for targeting and product purchases in the app, said MediaRadar CEO and cofounder Todd Krizelman. DTC brands run more ad campaigns on Instagram than any other social channel, according to BrandTotal.

But Instagram has gotten more crowded and expensive.

Instagram's CPMs have shot up in recent months to $10 to $16 compared to less-cluttered Snapchat, whose CPMs tend to run from $2 to $4, Herrman said.

Brooklinen, which began advertising on Snapchat in November, has seen its CPMs decrease by as much as 3 times, said Mustoe, which he attributes to less competition.

Snapchat is also stepping up its effort to attract DTC advertisers. The company recently reorganized its sales team under its new chief business officer Jeremi Gorman, with a sales team dedicated to "emerging brands" or DTC brands. These reps frequently offer tips and credit to try out new formats, said Curology's Lawrence.

It has also added features to its ads manager such as target-cost bidding and new bulk-uploading capabilities that make it easier to onboard DTC brands that typically handle most of their marketing themselves. They also can now adjust campaigns to optimize their goals such as reach and targeting.

Get the latest Snap stock price here.

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