When released in 2011, Shapchat provided a messaging service where the messages (uniquely) disappeared within seconds.
Its rapid growth in popularity (today there are 8 billion video views/day) meant companies were keen to use it as a marketing tool, and in January 2015 Snapchat responded with paid advertising options for $750,000/day.
In an attempt to justify such high rates, they also released a study concluding that Shapchat ads were enjoyed by viewers 3x more than the norm, and that significant positive impacts were felt on key brand metrics such as ad awareness and brand favourability.
Barely one year on, Snapchat advertising rates dropped to $50,000 with commentators claiming the lack of reportable metrics makes it hard to prove return on investment (ROI).
Given the ephemeral nature of Snapchat ads (here now, gone tomorrow), this reaction may be unsurprising given there is still no clear direction on measuring marketing achievement amongst those companies using more traditional marketing channels (Ambler & Roberts 2008).
Many believe that marketing’s value should be measurable through a financial metric like ROI. Hanssens (cited in Kehrer, Forbes 2013) points to various flaws in this methodology such as ROI being a tool to measure capital projects when marketing is an ongoing expense, and ROI is expressed as a ratio (one measure divided by another) when marketing performance is derived by subtraction. Discounted cash flow (DCF) relies on forecasting as a method of evaluation, which according to Ambler (2006) is a flawed method for evaluating past performance, while Baxter and Matear (2004) state that measures need to be developed specifically for the type of resource (e.g. intangible marketing outcomes) for it to be an effective measurement of intangible value. Likewise, Ambler believes Return on Customer (ROC) measures forecasting ability rather than performance.
Another cohort believes these types of financial metrics don’t account for marketing intangibles like brand equity, and prefer a range of metrics that includes both financial and non-financial data.
Balasubramanian, Mathur and Thakur (cited in Ambler and Roberts, 2008) found that “greater intangible assets were linked with the creation of more Shareholder value”. Kaplan and Norton (cited in Ambler and Roberts, 2008) suggest strategy mapping as a tool to link marketing activities with results, by identifying intermediate variables that can be analysed in conjunction with financial metrics. These intermediate variables (such as ad enjoyment and brand favourability) are what Snapchat has based its reporting on.
So while Snapchat has been challenged to build greater reporting capabilities, there is also a challenge for those using channels like Snapchat as a marketing tool i.e. taking the almost intangible nature of Snapchat’s measures and combining them with their own metrics (e.g. financial) to inform future marketing activities and assess past marketing performance.
In Measuring Social Ad Effectiveness, McPharlin (2012) was able to show how video advertisements shown on a social media platform positively affected intermediate variables like ad enjoyment and brand recall and association, and linked that enjoyment to greater brand favourability, purchase intent, and through to the very measurable resulting sales.
Potentially this is a good model for Snapchat to emulate, broadening its own research from measuring the intangible, to include the more measurable, but also to enunciating how intangible aspects affect traditional brand metrics such as purchase intent and sales.
A model that could encompass this approach is a multi-metric view combining financial metrics and intangible aspects to measure marketing performance, suggested by Ambler and Roberts (2008).
While companies have concerns with Snapchat’s lack of measurable metrics (such as demographic data), from a qualitative marketing response perspective it is essentially no more flawed than many other forms of marketing.
With more than 100 million daily users, there is strong impetus for companies to find that link between the brand equity generated on Snapchat, and financial return.
by Michael Douglass
WordPress username: michaelmoth
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