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.
This article originally appeared on Recode.net.