February 05, 2019 - By Ginna Hall, Senior Content Writer, Nielsen Visual IQ
Launched by Snap Inc. in 2011, Snapchat has experienced tremendous growth and innovation. The mobile app lets advertisers reach a highly engaged audience in new ways.
But first-time advertisers can find it challenging to accurately measure the impact of Snapchat. To learn the impact of Snapchat in a major category, Nielsen analyzed the advertising of five top beer brands. We found four things that may surprise you.
< Download our ebook Quantifying the Value of Snap Advertising to learn more. >
As an inaugural member of the Snap Marketing Mix Modeling Partner Program, Nielsen has been at the forefront of incorporating marketing activity data from Snapchat into marketing mix models for advertisers.
Marketing mix modeling uses aggregated historical performance data to calculate the total effect that every channel has on sales and other performance metrics, while controlling for exogenous factors like weather and holidays that impact performance.
Over the past two years, Nielsen has conducted multiple studies to reveal the impact of Snapchat. Because of this track record, Snap selected Nielsen to conduct a comprehensive meta-analysis for the Alcoholic Beverage category. Here are the results of that study.
Nielsen measured activity for five top brands in the beer category using marketing mix modeling, a regression-based analysis of weekly, store-level data. (To protect confidential information, we can’t reveal the names of the brands.) The analysis looked at 52 Snap campaigns with a spend of $12 million and 1.2 billion impressions.
The study assessed the impact of Snapchat, TV, print, radio, OOH, display and video advertising from August 2016 through October 2017. The total media spend was $864 million.
Nielsen’s analysis showed that Snapchat was more efficient than both traditional channels and other forms of digital media.
Category-level studies offer brands a valuable lens into performance across multiple brands/strategies. These findings help marketers in all industries understand Snap advertising, improve their execution, and get the most out of Snap.
Nielsen found that Snap advertising was more effective and efficient than either traditional or other digital media. In fact, Snap advertising was almost twice as effective in generating revenue versus other digital channels. While the average CPM was 42% higher, this cost was offset by a 33% increase in efficiency.
Nielsen research revealed that Snap Ads outperformed the category media average Return on Ad Spend (ROAS) by 4.7x. While all ad formats beat the media average, two overachieved: Self-Serve API Snap Ads delivered 7.8x more ROAS and National Filters delivered 8.4x more.
Snap Ads were significantly more effective when paired with Camera Marketing. When Snap Ads were complemented with Filters, they had a 12%-15% gain. When they ran with Lenses, they had a 28%-34% increase.
Brands in the study spent 65x more on TV advertising, yet Snap drove higher ROAS. Nielsen analyzed the impact of an additional $500,000 spend on revenue and found that this investment on Snap would yield more revenue than TV. The amount of additional revenue varied by brand and ranged from $500,000 to $4.5 million.
Nielsen identified sizable opportunity across brands to spend smarter, improve mix, and generate more on similar spend.
The model showed that brands could generate up to $3.6 million in additional revenue on the same spend by executing more effectively. When 0.5% of brands’ TV spend was shifted to Snap, these ads generated $0.7-$2.1 million in additional revenue from the same spend. When incremental spend was allocated to under-utlized products, they gained $0.2-$1.5 million in additional revenue.
Snapchat’s unique platform, multiple ad formats and constant innovation can present challenges for first-time advertisers. The results of this marketing mix modeling analysis revealed that brands may be limiting growth potential by spending heavily on one channel.
Marketers can improve results without increasing spend by sourcing funds from underperforming media. In this analysis, brands that shifted less than half of a percent (0.5%) from TV into Snap generated significant gains on the same budget. When done correctly, marketing mix modeling shows how you can get the most of your investment in Snap.
Download our ebook Quantifying the Value of Snap Advertising to learn more.