Snapchat's 'dynamic ads' product for e-commerce retailers rolls out worldwide

Sarah Perez

Snap today announced the global expansion of its new advertising product, Dynamic Ads. The ad product introduced last fall allows advertisers to automatically create ads in real time, using the brand's extensive product catalogs. Snap provides a variety of mobile-ready templates for advertisers to choose from, then serves the ads to Snapchat's 229 million daily active users based on their interests.

Before today, the ads were only offered in the U.S. Now, Snap says it's making the ad product available to all international global advertisers.

Dynamic Ads appeal to advertisers as they enable them to reach Snapchat's user base more efficiently. Advertisers don't have to spend time manually creating their advertisement to fit Snapchat's vertical format, but instead, sync their product catalog with the social platform and allow Snap to build their ads in real time. Another advantage of this format is that as product availability or pricing changes, the Snapchat ads will also automatically adjust.

The launch of Dynamic Ads first arrived at a time when some advertisers felt the Instagram ad market had become too crowded, resulting in saturation and higher prices. In the case of DTC (direct-to-consumer) brands, in particular, Snap's ads were often more affordable than Instagram.

The coronavirus pandemic, of course, has shaken up the ad industry. But even as advertising budgets were slashed during the first quarter of 2020, direct-response ads -- meaning those that direct a consumer to take a specific action, like buying from an e-commerce site -- remained a bright spot for tech giants Facebook, Google and Snap, CNBC recently reported. 

During its Q1 earnings call, Snap noted that direct response advertising had nearly doubled as a share of its revenue over the past two years, and now represents more than half Snap's revenue.

"We have made remarkable progress with advertisers looking to drive consistent, measurable ROI — launching dozens of new features over the last two years, such as bid optimizations for conversion events like app installs, as well as advanced targeting and measurement capabilities," said Jeremi Gorman, Snap chief business officer, during the earnings call. "This has helped scale our direct response revenue in particular, which has more than doubled as a share of our total ad revenue over the last two years. Consequently, this strategy has put us in a strong position for this immediate crisis as well as to continue to take share of the digital ad market on the road to recovery."

Snap's ability to cater to retailers and brands is now more critical than ever, as the COVID-19 lockdowns have accelerated retailers' e-commerce efforts.

Snap noted today that online sales in April grew to a 10-year high, representing a 23.8% year-over-year increase, according to data from IMRG (Interactive Media in Retail Group).

Ahead of today's international expansion, the ad format has been beta tested by brands including Adidas, Topshop and Farfetch. Other partners on Dynamic Ads include 4C, Smartly.io and Brainlabs.

"In the wake of the COVID-19 epidemic, adidas has further accelerated its digital business. With e-commerce a key focus for us in 2020 and beyond, we're excited to beta test Snapchat's Dynamic Ads in the U.K., Germany, France and the Netherlands," said Rob Seidu, adidas' senior director of Media Activation in Europe. "Within weeks we saw a 52% growth in ROAS (return on advertising spend) and we have subsequently grown our investment. The launch of Dynamic Ads allows us a route to reach our target Gen Z and Millennial audiences with relevant product creative throughout the consumer journey," he said.

Snap touts the global expansion of its Dynamic Ads as yet another step forward in its direct response offerings for advertisers, as well as a way to serve brands in the post-COVID era.

"The coronavirus has accelerated the need for businesses to look at their digital sales channels and encouraged them to be more innovative in how they do that," said Ed Couchman, GM for Snapchat U.K. "Since we opened up the beta testing, I was impressed at the number of businesses who wanted to get involved -- far above what we expected -- which really shows the appetite for brands to get on board with e-commerce," he added.