How Snapchat grew its ad business by persuading companies to try untested and experimental ad formats
SAN FRANCISCO — When Snapchat's chief executive, Evan Spiegel, took the stage in June 2015 at a marketing conference in Cannes, France, to champion advertising on the ephemeral messaging service, advertisers were wary. Tweets: @mdudas . See also Mediagazer Tweets: Mike Dudas / @mdudas : Alt headline: the story of every massively successful ad-supported consumer technology company. http://twitter.com/... See also Mediagazer
Context & Ripple Effects
This piece lands mid-arc for Snapchat's ad business. Evan Spiegel had pitched advertisers at Cannes in June 2015 against visible wariness; by March 2016 Bloomberg was documenting how the app's celebrity-driven reach gave advertisers access to a young audience (celebrities drawing millions of views), and weeks later Snapchat shipped Snap Ads Between Stories plus a formal Ads API — turning persuasion into infrastructure.
What follows confirms the playbook worked: a year later Snapchat was still inventing formats faster than buyers could vet them, debuting Promoted Stories and interactive AR Trial Ads inside the camera view, and by 2019 it offered Snap Select at fixed CPMs for premium content — the standardization stage of a business built first on experimentation.
First-order effects
- Advertisers signing on in 2016 are effectively funding R&D: they buy formats with no established benchmarks, trading measurement certainty for early access to Snapchat's young audience.
- Snapchat's revenue growth becomes directly tied to its ability to keep launching novel formats — each new unit (Stories ads, later AR placements) resets the 'untested' discount it charges.
Second-order effects
- Rival social platforms face pressure to match format-for-format innovation, since Snapchat's pitch makes novelty itself the selling point rather than scale or targeting.
- As experimental spend grows, advertisers demand comparability — pushing Snapchat toward packaged, fixed-price products like Snap Select to make inventory legible to mainstream media buyers.
Third-order effects
- If the pattern holds, consumer platforms institutionalize a two-stage ad market: an experimental tier where brands pay to co-develop formats, followed by a standardized tier once benchmarks exist — making continuous format invention a structural requirement, not a marketing flourish.
The trend: Social platforms are learning to monetize novelty itself — selling advertisers untested formats first, then standardizing the winners into fixed-price products.