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Snap is giving some small startups — including those from Y Combinator — free ads on Snapchat

Snap wants more advertisers to help bump up its ad prices.

Snap CEO Evan Spiegel
Snap CEO Evan Spiegel
Matt Winkelmeyer / Getty

Snap is giving away more free ads.

Snap, which earlier this month announced a new program intended to woo away advertisers from rival sites like Instagram with free ad credits, is offering similar ad packages to startups associated with numerous Silicon Valley startup accelerator programs, including Y Combinator.

Other accelerator programs Snap is targeting: General Catalyst’s Rough Draft Ventures, First Round Capital’s Dorm Room Fund, Berkeley-based The House and SF-based Runway.

As part of the arrangement, companies that have either graduated from these programs or are currently completing them will receive hundred of dollars in free Snap ads, as well as early access to new ad products and some of the company’s creative tools for actually making those ads.

The hope for Snap is to build early relationships with some of the tech industry’s up-and-comers, but also increase the number of advertisers bidding on the company’s existing ad inventory.

Snap sells almost all of its vertical video ads through automated software programs that auction off ad spots to the highest bidder. Snap’s issue has been that many of its auctions don’t have much competition: There aren’t enough advertisers bidding for the ads, which means Snap advertisers are getting better prices, but Snap itself is missing out on potential revenue. Snap ad prices were down 70 percent year over year in the last quarter of 2017, CFO Drew Vollero said on Snap’s last earnings call.

This free ad credit program — and the one targeted at current Instagram advertisers — is meant to bring in more bidders and thus create higher prices.

It’s hard to imagine the new program will have a major impact on Snap’s revenue, at least right away. Accelerator companies are almost always incredibly small, and advertising is not usually a top priority. (Though with free ad credits, perhaps it could be.)

Instead, it’s a good way for Snap to develop early relationships with potential advertisers down the line. It’s the same reason other big tech companies like Google and Microsoft have offered free technology services to Y Combinator startups.

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