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March 6, 2023
March 6, 2023
Advertising on Snapchat: How Pricing Works
Advertising on Snapchat: How Pricing Works
Need an affordable way to reach a global, deeply engaged audience of young people with your online advertising? That’s what Snapchat Ads does best. Here’s how to get started today.
Advertising on Snapchat is an efficient way to connect with an audience of 306 million daily active users¹ who open Snapchat over 30 times every day² to share their lives with friends and family via over 4 billion daily messages.³ That equates to 9 out of 10 young people worldwide who are engaged and ready to take action.⁴
Businesses of any size can launch advertising campaigns on Snapchat with as little as $5 a day, although we recommend at least $30 a day for at least 15 days to help your ad complete the Exploration Phase — the time our system uses to learn who in your audience is most likely to take action on your ad.
Businesses of any size can launch advertising campaigns on Snapchat with as little as $5 a day, although we recommend at least $30 a day for at least 15 days to help your ad complete the Exploration Phase — the time our system uses to learn who in your audience is most likely to take action on your ad.
The faster your ad completes the Exploration Phase, the sooner we can optimize its performance. Remember not to touch your ad during the first four days after you publish it; any edits you make will likely cause the Exploration Phase to start over.
How to Begin
Getting started on Snapchat is free: Create an account, open your ad account, and you’re ready to start publishing ads. From there, here’s how it works:
- Set your budget: Set a budget that works for you and your business. Set daily and lifetime caps and start and stop your ads any time.
- Optimize toward your goal: Use goal-based bidding to optimize toward your desired user action, such as app installs, video views, or completed purchases.
- Measure your results: Monitor how your ads are doing and adjust your budget based on results. You can also A/B test ads, if you’re not sure which approach is best.
How does pricing work on Snapchat?
Snapchat offers a variety of advertising options with different pricing models, depending on the specific ad format and targeting options selected, including:
- CPM (Cost Per Thousand Impressions): Advertisers pay a fixed amount for every 1,000 times their ad is displayed to users. (This is the most common pricing model for Snapchat Ads; the “M” is Latin for “one thousand.”)
- CPA (Cost Per Action): Charges an advertiser for a specified action taken by a prospective customer; calculated as the cost divided by the number of actions being measured.
- CPC (Cost Per Click): Charges advertisers when a user clicks on their ad. The cost per click varies based on the targeting and competition.
- CPV (Cost Per View): Used for video ads and charges advertisers every time their ad is viewed in full by a user. A view is counted when the video is played for at least 2 seconds.
- CPI (Cost Per Install): Used for app install ads and charges advertisers when a user installs their app after clicking on the ad.
Snapchat also offers bidding options for advertisers to compete for ad placements based on their target audience and ad creative. Advertisers can set a bid for their ads, and Snapchat's algorithm will use an auction to determine which ads are shown to users based on relevance and bid amount. They can also let the ad system set their bid for them.
With that in mind, the exact cost of advertising on Snapchat can fluctuate depending on a number of factors, such as your selected objective, your budget, the duration of your campaign, your bid goal, and your bid amount.
Campaign Budget and Duration
When creating a Snapchat Ads campaign, you set both a budget and a duration for your campaign.
Your campaign budget is the total amount of money that you’re willing to spend on your Snapchat Ads campaign. You can set a daily budget, which is the maximum spend per day, or a lifetime budget, which is the total spend over the entire duration of the campaign.
Your budget can be adjusted at any time during the campaign, and you can choose to have your budget spread evenly across the campaign duration or front-loaded (i.e., spend more at the beginning of the campaign).
Campaign duration is the length of time that your campaign will run. You can choose to set a specific start and end date for your campaign or select an ongoing campaign that has no end date. In both cases, the campaign duration can be adjusted at any time during the campaign.
Getting back to budgeting for a moment, keep these considerations in mind as you determine how much to spend on your campaign:
- Advertising goal: The first consideration is to determine what you hope to achieve through your Snapchat Ads campaign. Are you looking to drive sales, increase brand awareness, promote and sell a new product or service, or increase app installs? Your budget should be aligned with your objective to ensure that your campaign is effective in achieving those goals.
- Target audience: Next, identify the target audience for your Snapchat Ads campaign — Snapchat's user base tends to skew toward a younger demographic. Your budget should be adjusted accordingly to target your desired audience.
- Ad format: Snapchat offers a variety of ad formats, including Collection Ads, Story Ads, Filters, and Lenses. Each ad format has its own pricing structure, so your budget should be tailored to the specific ad format being used.
- Competition: The amount of competition in your industry can also impact the budget required for a successful Snapchat Ads campaign. If there are many other businesses advertising on Snapchat within the same industry, the cost of advertising may be higher, and the budget should be adjusted accordingly.
- Testing and optimization: Finally, it's important to be aware that a successful Snapchat Ads campaign involves consistent testing and optimization. You should start with a modest budget and adjust as needed based on what you see happening with your campaign's performance. Some ad formats may perform better over a shorter duration with a higher budget, while others may benefit from a longer duration with a lower budget. By testing different ad formats, targeting options, and budgets, you can identify the optimal approach for your business and allocate your budget accordingly. You can also run a formal A/B test if, for example, you want to see which image would perform better in an ad.
Goal-based Bidding
The cost of advertising on Snapchat is dependent on goal-based bidding. Goal-based bidding enables you to optimize toward a specific action that a Snapchatter is most likely to take, such as installing your app, watching a video, or completing a purchase.
While setting up your campaign, you can choose your bid goal (what action you want your ad viewer to take) and bid strategy in the Delivery section. Your campaign will be optimized in the context of your bid goal, based on your selected bidding strategy. All advertisers on Snapchat are billed on a CPM basis, regardless of bid goal.
With your bid goal selected, decide on your bid strategy and your desired bid amount. You can choose between 3 different types of bidding strategies:
- Auto-bidding: This bidding strategy allows Snapchat to set the bid on your behalf to get the most goal actions given the budget, target audience, and ad set duration.
- Max Bid: This bidding strategy tells Snapchat the maximum amount we can bid for you while we try to achieve the most efficient CPA (cost per action) possible.
- Target Cost: This bidding strategy allows Snapchat to bid on your behalf, directing Snapchat to make the best effort to keep your average CPA at or below the amount set by the ad-set end date.
Once your campaign has launched, Snapchat will deliver your ads to your desired audience and objective at the lowest possible cost. Due to budget pacing and user-action prediction variability, the actual cost per event may exceed the original bid amount.
Put your advertising spend to work for you today — start generating results with Snapchat Ads.
Case Study in the Spotlight
She’s Birdie
She’s Birdie offers personal safety alarms made by women for women. To showcase their product, build trust in their brand, and optimize their ad spend, they utilized various ad formats when they launched on Snapchat, including Video Ads, Collection Ads and Dynamic Product Ads, that incorporated user testimonial videos. The results:
- 2.4x return on ad spend
- 31% lower CPM compared to other platforms
- 61% of sales from 18-24-year-olds driven by Snapchat
“Snapchat has been a critical channel for our growth as a young business. We’ve been able to reach a younger demographic on the platform, which we see as a core audience of our brand. In addition, the stability that Snapchat has been able to provide our brand during uncertain times has been huge for us. We are looking forward to continuing to allocate more resources towards Snapchat as it becomes an even more significant channel for our growth.”
- Richie Mashiko, Head of Growth, She's Birdie
Snapchat can help your business grow.
Snapchat can help your business grow.
1Snap Inc. internal data Q3 2021. See Snap Inc. public filings with the SEC.
2On average. Snap Inc. internal data Q4 2020. (Full stat: On average, Snapchatters opened Snapchat over 30 times every day in Q4 2020.)
3On average. Snap Inc. internal data Q1 2020. See Snap Inc. public filings with the SEC.
490% of 13-to-24-year-olds in 20+ countries. Snap Inc. internal data Q2 2022. Penetration calculated as MAU divided by 2021 population estimates, per United Nations World Population Prospects, 2022.