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Here's what people are saying about what it's like to work with Snapchat right now

Jul 26, 2015, 16:04 IST

Evan Spiegel, CEO of SnapchatSuccessStories.com

Snapchat's recruiters are currently actively trying to poach director-level and other senior sales people from rival digital media platforms.

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Sources close to Snapchat told Business Insider that the photo-sharing app's talent team has been in discussions with executives from Twitter, News Corp, and a public ad tech company, among others. Our sources told us Snapchat was going after Twitter salespeople particularly hard.

The organization is hoping to make a big-name hire as it tries to fill the gaps left by former chief operating officer Emily White and former VP of partnerships Mike Randall, who both moved away from the company early this year.

It's by no means unusual for a digital media startup - especially one that is currently very much flavor of the month with both the press and investors - to look to recruit from other, larger digital media companies. (White joined from Instagram, for example.) But Snapchat isn't like those other digital media companies. Those companies are relatively mature in terms of commercializing their product, while Snapchat is only just getting started.

We spoke to over half a dozen senior sources across the advertising industry about what it has been like to work with Snapchat so far. The people we spoke to are pretty much all desperate to work with Snapchat (and some have worked directly with the company - others have simply done their own marketing on the app on their own,) but many were frustrated at the level of service they have received from the sales team. Demand seems to be outweighing supply.

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In some respects, that's a good position for Snapchat to be in. But advertisers are a demanding bunch and they want more contact, and more proof that the app isn't just a shiny new toy, but something that can actually add value to their businesses.

"Hitting reset"

Back in March, The Information reported that Snapchat was having to hit "reset" on its ad sales progress to date, following the departures of White and Randall, who had spent the previous summer meeting with and presenting to brand marketers and ad agencies. Those on the lower tiers of the sales team reportedly requested another round of meetings with advertisers as Spiegel was the only person left from the group who had held the initial face-to-face meetings with Snapchat and agency bosses.

That wasn't the only rejig. Snapchat appears to have taken a while to find its feet when it comes to pricing.

When Snapchat first went out to market, it was asking brands to shell out a minimum of $750,000 per day for a "Stories" ad, which some marketers thought was too expensive for such a young and untested app, according to Adweek. An agency source told Business Insider in March that the rates were later brought down to a "much more realistic pricing structure."

Then in May, Snapchat rolled out a new ad format: 10-second video ads, costing 2 cents per view, that will run between the article and videos on the Discover section, which displays content from partner publishers including The Daily Mail, ESPN, and Vice. That marks a significant discount from the reported 15 cents a view Snapchat had been charging for Discover ads.

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Last month Snapchat made its first high-profile sales hire since the departures of White and Randall: Vevo sales head Luke Kallis was appointed as the company's west coast sales chief. He reports into Imran Khan, the former Credit Suisse banker who was hired by Snapchat to become its chief strategy officer late last year.

Snapchat still hasn't announced a direct VP of partnerships replacement for Randall, and it doesn't plan to fill the COO role left behind by White.

"They definitely do not have their house in order"

Many of our sources described the sales team they had contact with as being composed of "young 20-somethings." That's to be expected: It's a young app, it appeals to young people, and its CEO (who is involved in many of the top agency CEO and top brand marketer meetings) is 25-years-old.

Snapchat told Business Insider the average seller has 10+ years experience, coming from places like Google, Facebook, Twitter, Hulu, and Vevo. The company has also tripled the size of the sales organization over the last quarter.

But the impression we got from our conversations is that the relative small size of its sales team to date means Snapchat isn't yet meeting its true potential from an advertising perspective - advertisers are throwing themselves at Snapchat, but the company just doesn't have the resources yet to give them all what they want, our sources suggested.

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Snapchat tells Business Insider it is taking a methodical, disciplined approach to building out its business. That starts with the biggest brands and largest advertisers in the world. Advertisers to date have included Coca-Cola, Procter & Gamble, Verizon, Universal, L'Oreal, Samsung, and Warner Bros.

It takes time to build a sales organization that can meet the needs of all the world's biggest advertisers. One of our advertising agency sources said someone internally at Snapchat had admitted to them that "they don't know where they are yet as a sales organization."

McDonald's is buying geofilters in SnapchatTwitter/hnromano

That agency source, who is director-level at an agency in the US, said: "When they speak to us, it feels very ad-hoc. We wanted to do something with them [for a major brand] that would make headlines - like McDonald's did with its geofilters [campaign in June] - but they were not equipped to do that and respond to our pitch and think of ideas. It seems to me like the McDonald's geo-filter came from the brand and agency, who asked them: 'Can you do this?' And the sales side says: 'Yes, we can, if it's not too hard for us to do.' It feels like they're saying [to other pitches]: 'We don't have time to do that now.'"

Meanwhile, many of the director-level agency sources we spoke to outside of the US said they had only had initial meetings with Snapchat - and many had received no contact at all.

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A director-level marketer at a major consumer brand in the US said Snapchat was only "gingerly" talking to his company. He added that while he saw the value of the app as a platform to reach younger consumers, he had yet to be convinced that any of the paid-for Snapchat ads from other brands had been successful.

The lack of hard numbers or case studies was a recurrent theme in our conversations with advertisers and agency execs. Marketers love numbers. They need to be able to prove to their chief financial officers that the $750,000 they plan to splash out on Snapchat is likely to generate a return for the business.

Speaking to Business Insider in Cannes last month, WPP CEO Sir Martin Sorrell recalled his clients saying "where's the data?" when six months ago Snapchat was asking advertisers to pay upfront commitments of $750,000. "It was quite difficult to do that," Sorrell added. But Sorrell has clearly been impressed by Snapchat since - at Cannes, he announced WPP was forming a new content marketing agency called Truffle Pig in partnership with Snapchat and The Daily Mail.

Snapchat's latest pitch deck to advertisers has a couple of numbers on ad performance:

Snapchat

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But adland wants more.

One Europe-based agency exec told us: "There's not a raft of case studies from an advertising point of view. And those that are there feel very limited - it's like the early stages of Facebook and Twitter, mostly talking about engagement and likes. We're at the start of a shiny new toy. From a brand perspective, Snapchat offers great access to a young audience and it's getting to the point where it feels unparalleled, like a deeper version of Instagram. What they need to do now is demonstrate they are a relevant and a credible advertising player."

Snapchat told Business Insider that we only needed to look at its repeat customers to see that marketers are happy with advertising on the app. Repeat customers include Universal, Coca-Cola, and Samsung. Snapchat also says it has run third-party measurement for nearly every campaign on its platform, reporting on metrics like campaign reach and composition, and campaign resonance and life. In terms of first-party metrics, Snapchat provides data such as views and view duration.

The CEO of a social media marketing company said he also wanted more geographic granularity into the "100 million" users Snapchat says use the app each month. He told us: "100 million users is a big success, but I have no idea what to do with it. We have all this hype, but they're not jumping on the opportunity. The press around them has created a curiosity amongst people - good for them - but they're not capitalizing on it properly."

For visionary start-ups, numbers don't always fuel decision-making - Apple's Steve Jobs was legendary for eschewing market research and relying on his own intuition with some products. An advertising agency chief executive who has had a direct relationship with Evan Spiegel described how, on some occasions, Snapchat's content partnership strategy was based more on executives' (including Spiegel's) personal tastes rather than quantitative research and data on what might prove the best return for the app.

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It's worth pointing out that many partners are clearly happy with Snapchat. The Daily Mail's US CEO Jon Steinberg (a partner on the Discover platform) recently compared Spiegel's leadership style to a young Sir Martin Sorrell. At Cannes last month Mondelez's CMO Dana Anderson told Business Insider: "I love the fact that they're getting into the space and becoming an avid marketing partner." Universal Pictures, which ran the first ad on Snapchat (a trailer for the movie 'Ouija') said it was viewed by millions, with its executive vice president of digital marketing Doug Neil telling the LA Times: "We were very satisfied with the experience." Here are 12 more case studies from happy Snapchat customers, via Fast Co.

Remember: This is exactly what happened with Facebook!

Snapchat's initial release was in 2011. Snapchat hasn't even been selling ads for a year: The first ad hit Snapchat in October 2014. It's a mere baby on the commercial front.

Facebook first started selling very rudimentary ads back in 2005. It took a long, long time to start convincing marketers to start spending significant amounts of their budgets there. And, like Snapchat, Facebook first began working with the top global advertising spenders on its big-money News Feed ads, before offering out the format to smaller marketers.

In the months following Facebook's IPO in 2012, shares in the company plummeted more than 50%. It took a year for the stock to trade above its initial $38 listing price. Why? Investors were spooked, thinking Facebook would not be able to make money from mobile. But Facebook moved swiftly and went from not having a mobile business, to mobile now representing 73% of its $3.3 billion in advertising revenue in the first quarter of this year.

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Back in 2012, Sir Martin Sorrell said: "I believe Facebook is the best or one of the best branding mechanisms in the world but I don't think it is necessarily an advertising medium." That year WPP was spending around $200 million with Facebook. In 2014 WPP spent $640 million on Facebook. EMarketer ranks Facebook ahead of Google as the biggest seller of digital display advertising in the US.

Business Insider

And another 2012 classic: Remember when General Motors pulled its entire $10 million Facebook advertising budget because it didn't think ads on the social network worked? The brand sheepishly returned a year later.

Twitter, too, took a while before it started building out a substantial advertising offer. Marketers were initially dissatisfied there too, according to a 2013 Forrester survey. Fast-forward to 2015, and Madison Avenue is calling for Twitter's ad sales boss to be the company's new CEO.

Another good comparison is Pinterest. It has only recently started offering advertising products, and last year was when it first started really ramping up its sales organization, making a series of high-profile hires to its sales team from the likes of Unilever and Google. Like Snapchat, it has taken a softly-softly approach to advertising, and created its own native ad formats that are congruent with the normal, organic experience of using the service.

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And remember: Snapchat doesn't want to be Facebook

Cannes Lions International Festival of Creativity

There's another perspective with which to view the Snapchat ad sales story to date. Perhaps Snapchat doesn't want to act like advertisers' other partners.

As one of our director-level agency sources told us: "I guarantee Evan Spiegel laughs when [the ad industry moans Snapchat hasn't published enough case studies.] He's building out a product for consumers. Agencies might be frustrated because they want to be in front of that audience now. But it's a multi-billion dollar company, the CEO is under no pressure ... In some ways, the ad industry backs ourselves into a corner by thinking we need metrics for everything. Maybe Evan Spiegel is calling people's bluff and saying 'we're not going to [provide them.]'"

Snapchat was the talk of this year's Cannes, the ad industry's annual festival on the French Riviera. An interview with Spiegel was the top-billed event on the main stage on the Monday.

In his on-stage interview, he talked about a grander vision for advertising: That it should be content people actively want to watch - referencing a recent P&G Father's Day Snapchat Story - not just content that simply serves to keep the stuff people actually want to view free of charge. He also emphasized, as Snapchat has done in the past, about how it deliberately doesn't allow advertisers to target ads to specific subsets of users, like they can on the rest of the web. Snapchat thinks this is type of ad targeting can be "creepy."

He also referred to other social networks that tried to "build products for people, then try to jam brands in there." Spiegel noted how brands then sometimes take it too far when they attempt to interact with consumers on social networks through marketing: "We think it's weird when brands try to act like your pal. I think that there's some nuance. I think it's very important to be friendly - but not a buddy."

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In essence, Snapchat doesn't want advertising on its app to be like advertising on the rest of the internet. So it follows that its sales approach might be a little different from other internet companies too.

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