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Snapchat Is Looking to Buy an Ad Tech Startup

Snapchat is still trying to understand ad technology.

Asa Mathat for Re/code

Snapchat wants to get serious about advertising — and it’s looking for some much needed help.

The media company wants to build ad technology to automate its ad sales, and as part of the effort, Snapchat is looking at possible ad tech acquisitions to help bolster its in-house team, according to multiple sources.

Snapchat has been in contact with multiple ad tech startups over the past six months, these sources say, including Beeswax, a startup that helps advertisers bid to target particular users, and Metamarkets, an analytics firm focused on programmatic buying.

Snapchat declined to comment, as did Beeswax and Metamarkets.

The acquisition effort is tied to the company’s plans to build out a more mature ad offering to coincide with all of the content it’s collecting from both users and publishers. Included in Snapchat’s blueprint is a plan to build an application programming interface that would allow Snapchat to automate how it sells ad campaigns, a similar technology already offered by rivals like Facebook and Twitter. These API plans are in their infancy, according to sources. Digiday first reported on Snapchat’s API ambitions last week.

The hope is that by automating the ad-buying process — Snapchat currently uses a sales team to work directly with brands and media buyers — it can dramatically boost revenue, an important focus now that its ads business is more than a year old.

One hangup in this whole automated ad tech plan: Snapchat doesn’t seem to have a very solid idea for how to get there. CEO Evan Spiegel and Snapchat don’t have a strong understanding of ad tech or what needs to be done in order to get some of these plans off the ground, numerous industry sources familiar with the company’s plan tell Re/code.

That’s not necessarily a surprise. The API plans are at their earliest stages and Spiegel has no background in ad tech, which is inherently complicated. The company has only been selling ads for a little over a year, so advertising in general is still pretty new. That lack of familiarity explains, though, why Snapchat is looking for outside help in the form of an acquisition.

Building an API could also help Snapchat with ad targeting. Advertisers can currently target users by things like location, which kind of operating system they use (iOS or Android) and gender — very basic parameters that pale in comparison to what Facebook has on hand.

AdAge reported on Wednesday that Snapchat is looking to build more targeted ad offerings akin to Facebook. The plan would let advertisers target users based on what types of content they watch within the app’s publisher channels, called Discover, as well as a user’s interests determined by places they visit online outside of the app. Snapchat is also working to provide better feedback to those advertisers on whether or not they are reaching their target audience.

If Snapchat can get there, though, advertisers will certainly be happy. They’ve been clamoring for more feedback and this kind of targeting for a while now.

One of the holdups was Spiegel, who was hesitant to use people’s browsing habits for targeting purposes, according to sources. He is still opposed to re-targeting, these sources say, which means showing you ads for items you looked at or considered buying elsewhere on the Internet. Spiegel said as much himself over the summer, calling re-targeting “creepy.”

It’s likely that Spiegel has warmed to the idea of some targeting, though. Snapchat has a $16 billion valuation to live up to. Growing a comparable business is the next challenge, and a clear catalyst for Snapchat’s new interest in ad tech.

Additional reporting by Mark Bergen.

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