Snapchat Ad Prices Are Tanking
Snap (NYSE: SNAP) decided to offer investors a closer glimpse at its advertising business in the third quarter. It disclosed the average ad price on Snapchat declined 60% year over year and 20% from the second quarter during its third-quarter earnings call.
The shift to Snap's API partners and its own self-serve platform led marketers to buy more ads via auction instead of directly from Snap's sales team. Snap sold 80% of Snap Ads via auction last quarter, up from 60% in the second quarter and 0% during the same period last year. As more marketers buy ads through auctions with lower minimum bids than reserved ad pricing, ad prices are declining.
Management believes the problem will sort itself out as more advertisers join the platform, but they're light on the details regarding when investors can expect the trend to turn around.
Source: Fool.com
