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Here's How Snap is Beefing Up Its Advertising Model

It’s pretty clear now of the full-fledged rivalry between Snap Inc. SNAP and Facebook Inc. FB. Where one just recently made its market debut, and brought with it an immense, dedicated following, the other was committed to stealing its best ideas over the years.

This competition likely began in earnest when Snap’s co-founder and CEO, Evan Spiegel, turned down Facebook’s $3 billion acquisition offer back in 2013, and since then, the tech giant has incorporated almost exact replicas of parts of its app, Snapchat, on Instagram, Whatsapp, Messenger, and now its home Facebook app.

Despite Facebook’s numerous efforts, Snapchat is incredibly popular, especially among younger users, and at this point, the only way to get a leg up on its biggest rival is through advertising.

Over the past few weeks, Snap has been beefing up its core advertising model, and if you take a step back, this could be seen as a move aimed directly at Facebook. At the end of March, the company launched a new search function that lets all the content created by its 158 million users much more accessible. Dubbed “Stories in Search,” the feature allows users to search through Stories that are shared through the public.

“We've built a new way to understand what's happening in Snaps that are submitted to Our Story, and to create new Stories using advanced machine learning. The results have been amazing: you can search over 1 million unique Stories on Snapchat," Snap wrote in a blog post.

“Stories in Search” has the potential to increase engagement, and in turn, monetization. While there was no direct mention of advertising, this clearly opens up a whole new way for Snap to make money through advertising. Like in Google GOOGL, Twitter TWTR, and even Facebook, providing users a search functionality gives valuable information to help target ads.

In addition to a search function, Snap is rolling out two new methods of ad targeting. According to Business Insider, advertisers on Snapchat will now have the ability to target users who are more likely to install the social media app than others. This is called “goal-based bidding for app installed ads,” and these types of ads will ask users to swipe up on full-screen video ads that uses machine-learning technology developed by Snap.

Advertisers can also target Snapchat users that have previously interacted with other ads they have ran in the app before. For instance, if an advertiser purchases one of Snapchat’s Lenses, the app’s pricier selfie filters, for a campaign, they can later target those same users again with other types of ads.

These new types of advertising will be crucial for Snap going forward, both because of its ongoing rivalry with Facebook and because ad dollars are the main source of revenue for the company. Since its IPO, analysts and investors have wondered how Snap plans to make money—as of now, it’s still unprofitable—and innovating its advertising model is a key step to improving its bottom line.

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