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Snapchat's Discover Publishers Are Asking for Big Ad Rates -- And They're Getting Them

Advertisers are paying big for Snapchat. Because teens.

Snapchat’s Discover platform is one of the hottest properties in media. That’s why Snapchat and its publishing partners are asking for very high prices for ads that run on Discover — and why marketers are paying them.

Industry sources say Discover ad pricing is running around $100 for every thousand views — a rate that’s something like twice what a premium video publisher can get, and many times what a mere Web publisher can command. Perhaps that’s why Alibaba felt comfortable putting $200 million into Snapchat, at a reported $15 billion valuation.

Snapchat launched Discover in late January. It’s a new section of the app where users can watch videos or read stories from a dozen different publishers like CNN, Vice or ESPN.

Snapchat publishers set their own rates and provide a guaranteed view count to ad buyers based on traffic patterns they’ve established in the last few weeks. Industry sources say that on average, publishers are getting around 10 cents a view for their ads, which are seen anywhere from 500,000 times a day to a million times a day. That means publishers are able to command $50,000 to $100,000 a day for their stuff.

The publishers and Snapchat split the revenue differently depending on who sells the ad. If a publisher sells the ad space, they get 70 percent of the revenue; if Snapchat sells the ad, the revenue is split evenly.

Publishers can also bundle the Snapchat buys with inventory on other platforms if they sell it themselves; sources say ESPN’s sales force is taking this tactic, and has been able to sell Discover ads for more than $100,000 a day.

Since Discover is brand-new — Snapchat itself is only four years old — a lot of this pricing and ad buying is experimental. And prices usually run high in the early days of new properties, while publishers and marketers identify a proper balance.

There’s also a bit of a safety net for marketers to give it a try, too. If the publisher gets fewer views than they guaranteed to the marketer — which has been happening regularly, according to one source — then publishers will run the ads for longer than the 24-hour window until that view total is hit.

And in any case, a big part of the Snapchat pitch goes beyond raw view totals. Publishers believe they’re reaching teens and millennials they’re having a hard time reaching elsewhere, which is why they’re okay putting their stuff on a platform that doesn’t link to their own websites and apps — meaning they can’t create referral traffic.

That being said, we had trouble finding many ads within Discover this week. One source says that this has been standard — sometimes they’re there, sometimes they aren’t, especially in these early days.

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