For advertisers, Snapchat's got the kids

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PHOTO: The Snapchat app logo is seen on a smartphone in this

By David Ingram

SAN FRANCISCO (Reuters) – Social network Instagram has come to
look more like rival Snapchat after copying some of its features,
but marketers say Snapchat’s younger audience and safeguards
against poor placement drive enthusiasm for advertising on the
smaller app.

Expectations for Snapchat’s future tumbled with its stock price
after an initial public offering last year, mainly over doubts
that Snapchat could compete against Instagram, but last week,
Snap reported a 72 percent rise in quarterly revenue that beat
analysts’ forecasts and re-ignited confidence.

Snapchat, owned by Snap Inc, retains an advantage with the
millennial generation who popularized its disappearing messages
and animated face masks, despite attempts by Facebook Inc-owned
Instagram to woo them away, advertising executives say.

The advantage among young people is even expected to widen this
year, at least in the United States, according to estimates
released on Monday by research firm eMarketer. This year,
Instagram will add 1.6 million Americans under 25, while Snapchat
will add 1.9 million in the age group, eMarketer said.

The different demographics mean businesses feel obligated to
spend on Snapchat even if they already do so on Instagram, said
Aaron Shapiro, chief executive of digital marketing firm Huge.
“It’s all people who are reaching youth,” Shapiro said of
Snapchat’s strength.

Facebook, Instagram and Snapchat declined to comment on the
eMarketer figures.

One section of Snapchat is also perceived among marketers as a
potential haven from the amateur posts that define much of social
media, created by users or aspiring internet stars rather than by
professionals at media companies.

One of the ways that advertisers said Snapchat has distinguished
itself is the app’s “discover” tab, a prominent section of the
app that spotlights short videos from outlets such as ESPN or the
New York Times.

Snapchat chooses which outlets to work with, giving advertisers
some assurance their video ads will run adjacent to
professionally developed shows, not less predictable
user-generated content.

“Snapchat can provide a highly controlled environment for
advertisers to reach an audience,” said Nick Cicero, chief
executive of Delmondo, a firm that advises corporate brands on
social media advertising.

Instagram has an “explore” tab with some professional content but
no equivalent of Snapchat’s “discover” tab. Instagram’s sibling
app Facebook has a “watch” tab that is more similar but is less
than six months old.

Instagram and Snapchat, both built around the smartphone camera,
have been locked in a rivalry that heated up in 2016, when
Instagram copied the popular Snapchat feature known as “stories.”
The feature allows people to post photos and video that disappear
after 24 hours.

Advertisers are rooting for Snapchat and for Twitter Inc to
succeed, Shapiro added, so that they do not need to rely so much
on the largest internet advertising platforms, Facebook and
Alphabet Inc’s Google.

Interest in Facebook is waning among young Americans, eMarketer
said in its note on Monday, estimating a 5.8 percent decline this
year in Facebook U.S. users aged 18 to 24 years.

Still, Snapchat remains behind Instagram in some features that
advertisers want. A business cannot, for example, create a fixed
profile page on Snapchat to host photos and collect a data-rich
list of fans the way it can on Instagram.

Business pages make Instagram a “mobile visual shop,” Facebook
Chief Operating Officer Sheryl Sandberg said last month, adding
that two-thirds of visits to Instagram business profiles were
from people who do not follow them.

In other ways, though, Snapchat is catching up. The company has
in the past year transitioned to a self-serve ad system with
pricing based on an auction, which marketers said has made buying
much easier especially for smaller advertisers. Facebook and
Instagram already have such systems.

(Reporting by David Ingram; Editing by Peter Henderson and Lisa

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