Snap Inc (NYSE:$SNAP), which is an American technology and social media company, is doing everything in their power to persuade advertisers and marketers to spend their money within their company.
Just recently, Snap Inc, the parent company of Snapchat, has reported that they have acquired Placed, which is a Seattle-based location analytics company. As of right now, the specifics of the agreement have not been disclosed, but, according to GeekWire, Snap Inc paid more than $200 million for the start-up. This makes it one of the largest acquisitions in the market to date. This deal came about after Snap Inc’s first-ever quarterly earnings as a public company were released, which had a $2.2 billion loss. In the wake of this dismal report, Snap Inc now wants to prove to investors looking to make a technology investment that their company can become very profitable.
Acquiring Placed likely means that Snap is trying to strengthen its ad measurement capabilities, in an attempt to attract more advertisers. This is a lucrative effort when you factor in the fact that advertising makes up roughly 96% of its total profit stream.
Despite Snap Inc. representatives declining to comment on the deal to TheStreet, Placed CEO David Shim made a statement in a blog post that the company has traced more than $500 million in media spend to store visits, across thousands of operations by hundreds of advertisers, over the past 12 months. Shim added in his blog post that Placed will remain an independent company even once the deal closes. This means that Placed will continue to work with advertisers running ad campaigns on other networks, such as Facebook.
Shim wrote in his post that “Placed’s goal continues to be the adoption of a common yardstick that can measure the offline effectiveness of advertising across multiple platforms and publishers.” According to Shim, “we believe we can drive much better results for advertisers and publishers.”
In the past, Snap Inc has tried to offer more advanced ad campaign information, and that will now be built upon as Placed provides companies with ad-to-in-store traffic detail, including the number of store visits and the cost per store visit. In April of 2017, Snap put in motion a tool called “Snap to Store”. This tool is primarily for advertisers so they can see when their campaigns are driving foot traffic to stores, theaters, or other locations. Snap Inc. stated that this offering can help a number of advertisers gain more of a return on investment.
With that said, analysts of Wall Street have doubts about Snap Inc, and they still look at it is as experimental ad dollar, instead of a consistent part of their ad budget. This outlook could cause long-term risk for investors. Imran Khan, the chief strategy officer for Snap, stated earlier this month that Snap Inc is putting a lot of time and effort into educating brands about its various ad offerings.
According to Khan, the Snap to Store tool is the “holy grail” of advertising data. As of right now, this tool has landed Snap Inc. 13 new advertising partners. Other features on the Snap to Store, such as the vertical video advertising, have forced Snap to meet with advertisers and explain face-to-face the value proposition. Ultimately this is meant to attract advertisers to this platform.
Khan explains that “when we created fullscreen mobile ad units, people didn’t want to make ads specifically for vertical. We showed advertisers that full-screen ads have a significantly higher completion rate – in some cases 9x – and advertisers realized that it drives higher ROI.”
For anyone looking to start investing in technology, or anyone wanting to start their own technology company, Khan provides a helpful tip; “if you provide value for advertisers, they’ll ultimately adopt it.”
On Monday, shares of snap closed 4.1% to $20.21 and so far this year, shares have fallen 17.4%.
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