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This week, Snapchat announced a deal to allow Viacom Inc. to sell ads on the platform. (Chris Ratcliffe/Bloomberg)
This week, Snapchat announced a deal to allow Viacom Inc. to sell ads on the platform. (Chris Ratcliffe/Bloomberg)

persuasion

Social media companies aim to take advertising to the next level Add to ...

The amount of time people spend on their phones every day is, quite literally, jaw-dropping. And considering how much of that time is spent checking in on social networks, it’s no surprise that for some time now, they have been a growing draw for advertisers.

But recent, and ongoing, changes to advertising that services such as Snapchat, Twitter and Instagram offer show that many social media tools are still trying to grow up. After the initial work of attracting users to each shiny new tool, social media must then pivot and focus on attracting advertisers.

These ongoing efforts were in full view this week. Twitter Inc. on Wednesday reported that its user growth has all but stalled but that its advertising business is continuing to grow, to $641-million (U.S.) in the last quarter. At the same time, it announced a small tweak to the “timeline” in which people read tweets: It will still show the latest stuff first, but now there will be a section up top that is set to show recent tweets based on an algorithm that determines what each user is most likely to want to see. Twitter also unveiled a new unit of advertising in the service: “first view” ads will allow marketers to buy a space, pinned to the top of users’ screens, for their video ads.

Also this week, Snapchat – the app that allows people to send each other text, video and photo messages that disappear, and to see news and watch videos from media outlets and others in its “Discover” and “Live Stories” sections – announced a deal to allow Viacom Inc. to sell ads on the platform. Partly, it was a sign that advertisers are beginning to see Snapchat not just as a curiosity for a niche and very young audience, but as an increasingly established part of the social-media landscape. And last week, Instagram extended the maximum length of video ads it sells on its photo- and video-sharing service from 30 seconds to 60. Unilever is launching advertising for its Axe brand at the new length.

On their own, none of these changes is earth-shattering. But together, they do indicate that many of the most prominent social-media channels are now trying to come into their own in the advertising business.

“This is taking it to the next level,” Jamie Michaels, head of brand strategy for Twitter Canada, said of the new “first view” ads. “There’s been nothing [in terms of ad space offered before] that is this prominent.”

This is important because of the growth potential for advertising in this space: 23 per cent of adult Canadians’ total time consuming media is spent on the mobile Internet, according to a recent report commissioned by IAB (Interactive Advertising Bureau) Canada, and conducted by media-buying and planning firm PHD Canada. Despite that, only 8 per cent of advertising budgets are devoted to mobile, according to the report. Twitter, Snapchat, Instagram and Facebook are all built for mobile devices, and the vast majority of the usage comes from mobile. That’s a runway for possible growth.

Facebook, of course, has already gone through this evolution into serious money-maker – drawing $5.6-billion (U.S.) in advertising revenue in the fourth quarter alone. A bonanza of growth was driven largely by a change Facebook made in late 2013 and early 2014, reorganizing the service so that brands’ “organic” (i.e., non-paid) messages were pushed way down users’ feeds, in favour of posts from friends that they most wanted to see. That forced advertisers to pay for exposure to those audiences.

“It was heavy-handed but [Facebook’s ad revenue] went through the roof. … People were hooked on Facebook, and they were hard conversations to have with clients: ‘Look, organic reach was 80 per cent and now it’s 20 per cent, and it’ll probably be down to 3 per cent, too.’ And that has happened. Sometimes it’s less than 1 per cent,” said Matt Singley, CEO of Los Angeles-based social-media marketing firm Singley and Mackie Inc. “That change was exactly what they needed to do for company growth.”

The question is whether other platforms can afford to make similar moves. For now, Twitter says it has no plans to completely overhaul its algorithms; Instagram, which is owned by Facebook, has no plans to change the chronological scheme for now either, though it is discussed frequently.

Nor is it reasonable to assume that Facebook, with more than 1.5 billion monthly active users, is a model for what other social media channels could or should be. But those channels are working on evolving their relationships with advertisers.

Snapchat, for example, which says it has 100 million daily active users, ran its first ads in October, 2014, and is still exploring what its advertising should look like. During the Super Bowl, Gatorade paid for a sponsored “lens” – one of the tools in the application that allows users to edit and distort photos of themselves – to make it look like the person had a tub of Gatorade dumped on their head. When people choose to associate themselves with a brand, even just for fun, and share with their friends, that can be a very valuable type of advertising. To promote the most recent James Bond movie, the studio paid for a channel in the Snapchat “Discover” tab, video ads inside other content, and sponsored lenses of its own.

“We saw early on that Snapchat is gaining a lot of momentum with millennials,” said Jeff Lucas, Viacom’s head of sales. “We started working with them … because we’re always looking for how to add more value to what we offer our advertisers.”

Part of the shift is not just in the type of advertising offered on social media, but the ability to measure its effectiveness. According to Mr. Singley, marketers are craving more and better reporting on how their campaigns are doing on platforms such as Snapchat. Instagram announced on Thursday that it was replacing the “likes” counter underneath its videos with a view-count similar to what’s seen on YouTube (it counts a “view” as three seconds or more) to better show just how popular videos are.

“It provides intelligence for advertisers,” said Joelle Maslaton, brand development lead at Instagram in Canada.

“We have to have the data,” Mr. Singley said. “You have to show what the results are. As long as these platforms make data more available and more robust, they’ll all succeed.”

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