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Report: Snap Goes After Instagram's Bottom Line By Offering Free Ads

By NexChange
Capital Markets

Fresh off of shocking Wall Street by ending a miserable 2017 with a stellar 4Q, Snap Inc. is apparently emboldened by its renewed momentum as is taking on its fiercest rival: The company has been contacting advertisers who buy vertical video ads on Instagram and offering them free credits to advertise on Snap instead, Recode reports.

Snap confirmed to Recode that it is has been reaching out to Instagram’s advertisers, directing them to an online application in which they can conform that they bought ads on “a Snapchat competitor” within the past few months. A Snap source tells Recode that the company is offering “several hundred dollars” worth of credits.

Per Recode:

Snap hasn’t been shy about its need to increase its pool of advertisers. The company sells almost all of its vertical video ads through a process called programmatic ad buying — in other words, automated software programs that auction off ad spots to the highest bidder. The problem for Snap thus far has been that many of its auctions don’t have much competition, meaning that there aren’t enough advertisers bidding for the ads, and those that are using the service are getting the ads on the cheap, since few other advertisers (or no other advertisers) are bidding against them.

Snap’s fourth quarter sales surged 72 percent to $285.7 million, easily beating the $252.8 million average forecast of analysts, according to Bloomberg’s data. Meanwhile, the company reported 187 million daily active users for the quarter, which is up 18 percent year-over-year and more than the 184.3 million projected by analysts.

Photo: TechCrunch/Flickr

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