Marketing Mix Modelling (MMM) has been around for many decades and with the changes in privacy regulations and advancement in technology, it is experiencing a renaissance.
At Snap, we believe that MMM is an effective tool to measure marketing effectiveness on business outcomes like sales. We partner with key third-party MMM suppliers to ensure campaign outputs include the granularity and specificity for advertisers’ to determine Snapchat’s return on investment.
Last year, we published research based on MMM that highlighted the strong performance Snapchat delivers for the Financial service vertical. The research found that full funnel campaigns drive strong ROAS for the Financial Services market. And, we saw that when brand and DR campaigns are run in tandem, Snapchat indexed ROAS is higher than when they are run in isolation.
We wanted to see if these results would apply to other categories as well, so we commissioned a meta-analysis with TransUnion, using their proprietary marketing mix models (MMM), to evaluate the Return on Ad Spends (ROAS) in driving sales. The research covered:
- 3+ years of data across 36 advertisers spanning Commerce, Quick Service Restaurants (QSR), Technology, Telecom and Travel brands.
- Up to12 channels per category, with a total marketing investment of over $15 Billion across all categories.
Findings: Snapchat = More incremental sales
And what did the research find? Snapchat ads contribute disproportionately more marketing-driven sales relative to the amount of budget it receives across all of the categories. This makes Snapchat a very efficient channel for marketers to use as part of their media mix. For the Telco category specifically, the Snap spend returns 2.1x more in terms of share of impact relative to the share of spend. In other words, it gives 2.1x more than it takes!
Snap drives stronger ROAS than all Paid Social
When looking at return on ad spend (ROAS) by media channels across all the categories, the analysis found that Snapchat is a top performing channel - Snapchat had the highest ROAS relative to all channels for 3 out of the 5 verticals, and outperformed Paid Social in aggregate across all verticals.
What does that mean for advertisers? Not only does Snapchat drive ROAS, but it does so disproportionately more than competitors. For every dollar spent on Snapchat, brands across a variety of categories should expect above average ROAS.
ROAS can be enhanced EVEN MORE by activating across Ad Products
We also found that there is no one ad product in particular that is contributing to the strong ROAS. Within each vertical, all ad products were efficient at driving ROAS and performed above average.
Want to drive even stronger performance across your marketing mix? Then spend more on Snapchat!
The meta-analysis also revealed that even though Snapchat disproportionately contributes to marketing-driven sales and is driving stronger ROAS than all other Paid Social platforms in aggregate, there is still room for improvement. The brands studied have the opportunity to get more bang for their buck on Snapchat.
According to TransUnion’s optimization algorithms, increased spend by 33% will lead to 55% increase in incremental sales attributable to Snap.
Busting myths - Brand campaigns can drive ROAS (esp on Snapchat!)
One of the biggest challenges facing marketers is how to split their budget between brand and performance campaigns that drive outcomes.
When the objective of a campaign is to drive sales, more often that not, spending on brand campaigns is overlooked. Harvard Business Review found that, “pitting brand building and performance marketing against each other in a competition for budget and attention unnecessarily damages the effectiveness of both”. However, this MMM analysis revealed that across categories, brand campaigns can ultimately enhance ROAS, especially on Snapchat.
When the objective of a campaign is to drive sales, more often that not, spending on brand campaigns is overlooked. Harvard Business Review found that, “pitting brand building and performance marketing against each other in a competition for budget and attention unnecessarily damages the effectiveness of both”. However, this MMM analysis revealed that across categories, brand campaigns can ultimately enhance ROAS, especially on Snapchat.
The question shouldn't be whether to activate on either brand or DR campaigns, instead campaigns should run across the funnel. Both brand and DR campaigns were efficient across all 5 verticals on Snapchat.
One plus one is more than two - Combining Brand & DR campaigns delivers greater ROAS
Across all 5 categories, the analysis revealed that running brand and DR campaigns concurrently generates higher lifts compared to average Snapchat ROAS.
At TransUnion, we’ve always believed that understanding consumer behavior is fundamental to navigating marketing dynamics and through years of partnership with Snap on research we’ve unlocked invaluable insights.
— Mike Finnerty, SVP Global Services at TransUnion
What does this mean for brands?
- Snapchat should be part of the media mix. Compared to Paid Social overall and all other media in aggregate, Snapchat is more efficient in increasing marketing-driven sales
- When activating on Snap, ensure a mixture of Ad Products are used
- Educate your stakeholders that brand campaigns have the power to drive sales outcomes. esp. on Snapchat.
- Flight Brand and DR campaigns concurrently to drive greater ROAS
If you would like to see the full reports for each vertical then please reach out to your Snap Sales Rep or Marketing Science Lead.