Snapchat claims they can command $1m a day for 3D branded AR images
Snapchat can reportedly charge advertisers $1m a day for one of its augmented reality (AR) lenses -- digital images placed within its real-time videos. While one ad buyer said a branded 3D lens costs between $500,000 and $1m a day, Snapchat said its base price was $300,000. Final prices are dependent on factors such as whether the image is targeted at a specific audience, how long it runs and the nature of the impression. Advertisers can justify the cost because engagement with the lenses is high, according to a New York-based ad buyer.

Snapchat’s 3-D augmented reality lenses are the newest marketing ploy that allows people to put virtual avatars or Bitmojis in a real-life setting. Brands like Budweiser, BMW and this month, McDonald’s have tested this AR development.

The AR lenses are not cheap — and Snapchat seems to be aggressively selling them to holding group agencies, claiming its AR technology is among the best, according to conversations with six ad buyers. How media agencies buy 3-D lenses and what they pay for them varies widely because pricing depends on factors like targeting criteria and when an AR lens goes live: One ad buyer from a major media shop said an AR lens typically costs between $500,000 and $1 million per day. This executive’s team recently paid over $700,000 for a branded 3-D lens for one day.

“Since the AR lens is a premium product, we typically support that with other types of ads on Snapchat,” said this person. “Snapchat has a rate card, but there are a million ways that advertisers can negotiate the price.”

The New York-based executive added that in the sales pitch, Snapchat’s senior leadership believes “AR is the next internet,” so a brand of the future needs to have an AR presence. “Snapchat highlights that it has superior AR tech in its sales pitch,” said this person. “Snapchat positions AR lenses as a standalone media buy — they are Snapchat’s most expensive [ad] product at the moment.”

Another holding group agency executive has a different experience. This executive said Snapchat didn’t pitch 3-D lenses as a standalone ad offering in its sales pitch — instead, Snapchat added them to a holistic media-buying plan. “We usually take an audience-first approach instead of one ad unit planning,” said this person.

While James Douglas, svp and executive director of social media for IPG Mediabrands-owned Society, said his clients typically make a big media commitment with Snapchat — some sign an annual media contract — with Snapchat Ads at the core and stickers and lenses as value-add placements.

It’s all about media negotiations, he said. For instance, if an insurance company that usually doesn’t think about Snapchat wants to get 20-year-olds to consider their 401(k) in one Snapchat campaign, Snapchat may charge $300,000 a day for a 3-D lens because the brand is unlikely to be a long-term client, according to Douglas.

“If it’s a well-known consumer packaged goods company, Snapchat may quote $200,000 for an AR lens, but not on a premium day,” he said. “Snapchat is very flexible to negotiate media investments with agencies, and I like that.”

A Snapchat spokesperson said $300,000 is the base price for a 3-D lens that can run for up to 12 months. But the final price an advertiser would pay depends on if it’s a national takeover on a premium day or if it’s a targeted audience lens priced on impressions.

“If a brand paid $750,000 for a day, it has been a holiday nationwide takeover where advertisers can reach up to 30 million unique people and 65 million impressions,” said the spokesperson. “On average, [effective] CPM for [3-D] lenses is between $8 and $20. This is lower than almost all premium video content on large platforms.”

For now, AR lenses — like standard lenses — are mostly manual ad buys, with agencies giving Snapchat ad assets and Snapchat doing the engineering. The entire lens development process can take up to six weeks, ad buyers said. But as Snap CEO Evan Spiegel mentioned in the company’s earnings call in November, Snapchat is testing a self-serve toolkit called Lens Studio with select brands. The New York-based executive’s team is in the pilot program, and this person said with the self-serve platform, advertisers can upload creative assets online and create an AR lens on their own in about an hour.

“Snapchat only offers the AR toolkit to a small number of top advertisers at the moment,” said this executive. “Snapchat plans to roll it out free of charge in the near future.”

Douglas said conversations with his Snapchat reps suggest the platform has worked aggressively on moving ad inventory to programmatic buying, with Snapchat Ads — a vertical video ad format — being the fundamental ad placement.

“In addition to Snapchat Ads, the platform is also moving filters, stickers and AR lenses into an actionable bidding environment,” said Douglas. “Those ad offerings need to grow and expand.”

Although Snapchat AR lenses are not cheap, advertisers interviewed for this story believe engagement with the lenses is high, and Snapchat offers brand lift studies to quantify brand awareness.

“We justify our ad spend [on 3-D lenses] because we see millions of people often use the lens and share it with their friends. People are 100 percent engaged with the brand — that type of engagement is valuable,” said the New York-based executive. “But most clients haven’t bought into the idea that everyone needs an AR lens yet. After all, those lenses don’t drive sales.”