Snapchat feels out UK market with new headquarters in London
According to Business Insider, Snapchat will open its first European headquarters in London, Snapchat's second largest market, at the end of the month. Snapchat plans to understand local culture so it can incorporate appropriate advertising partners on its platform that will appeal to consumers. Advertisers are calling for a clearer price structure from Snapchat as brands receive a range of prices for different ad bundles. One issue where the UK may differ from the US is targeting, as the Snapchat platform does not supply significant data on its users, "this kind of mass blast might work for the US, but in Europe it’s a lot more fragmented," said Renee Mellow, Head of Paid Social at Mediacom. 

Snapchat’s first European headquarters is set to open in London at the end of this month, according to Business Insider, but U.K. agencies are keen for more analytics from it.

The U.K. is Snapchat’s second biggest market, and its audience are frequent users: 10 percent of 16-24 year olds check the app at least ten times a day, according to Ofcom’s August report. As such, agencies are eager to work with Snapchat, but the platform still needs to prove its value on the bottom line, they say.

“It has scaled a platform that reaches a lot of people on a daily basis, which is impressive,” said Paul Dalton, chief media officer at digital agency Digitas LBi. “But the ad solutions were sold based on those components of scale and reach quickly. It needs to dial up on the impact that communications have on client outcomes.”

He said the platform needs to be willing to work with agencies on their own specific methodologies to test how Snapchat can yield return on investment for clients.

There are other challenges, too. Successfully opening in new markets requires a nuanced understanding of local culture. Snapchat’s initial focus has been securing global partners for its Discover platform, like Vice, National Geographic and BuzzFeed. Dalton, who has been working with Snapchat successfully over several campaigns on the U.S. side, told Digiday he would need to see “advertising partners and publishers that are tailored to this market. The user behavior will be different and the interest in publisher channels will be too.” A partner like ESPN, for instance, would not resonate as well with U.K. audiences as Sky Sports.

Proving the worth of advertising on Snapchat may go some way in justifying its famously high ad rates, which have been a barrier for entry for some advertisers in the U.K. Renee Mellow, head of paid social at media agency Mediacom, said Snapchat also has consistency issues.

“There is no rate card which can be really frustrating,” Mellow has worked with Snapchat via publishers on Discover, and explained how she has seen prices range from $50,000 to half a million dollars for different ad bundles over the different brands. A clearer pricing structure and local representatives to discuss bespoke packages is clearly needed.

Targeting is another potential sticking point for advertisers. “It legitimately does put users first,” said Mellow. “Its proposition is ‘we won’t ask you anything about yourself, we won’t hyper target,’ so there’s a real lack of data — it’s a hard sell for clients,” she said. “This kind of mass blast might work for the U.S., but in Europe it’s a lot more fragmented.”

Instead Mellow has to target audiences within the publisher channels like National Geographic, Vice or Refinery29. “It’s nowhere near as sophisticated as Facebook. The volume of data we’re used to seeing in our digital campaigns is so rich.”

Bogdana Butnar, head of strategy at digital agency Poke, is less concerned. “We went through similar things with other platforms. Snapchat knows what the standards and expectations are like in the industry,” she said.

“How young people communicate has changed. Snapchat understands what is meaningful on that platform. If this changes the way that we produce things for brands then it’s also going to change the way that we measure it.”