Dive Brief:
- Snapchat is reportedly instating a major shift in its advertising agreement with publishers, moving from a model where Discovery portal publishers sell ads and share the revenue with Snapchat to a licensing fee model where Snapchat pays publishers and then sell all the ads itself, according to The Wall Street Journal.
- As the Journal notes, the change is similar to how TV networks compensate studios for shows.
- An unnamed source said some publishers might also receive a small cut of the ad revenue along with the licensing fee, though the change-up is reportedly "rankling" many.
Dive Insight:
The shift from Snapchat comes in front of an expected $25 billion dollar IPO of parent company Snap Inc., and is likely intended to bolster ad revenue to make the brand more attractive to potential investors. It might also damage Discover portal publishers who have put time and resources into building in-house Snapchat sales teams and media packages.
Not all publishers are against the idea, however, since they would be guaranteed a set fee, and the ad business would be handled by a group that understands the platform best – Snapchat.
“Snapchat knows their platform far better than we do,” one media executive at a company that publishes on Discover told the Journal. "I’m thrilled for them to go rep our content. I think there’s more money in it for everyone."
Though often viewed as an app largely appealing to younger demos like Gen Z and millennials, Snapchat has seen an influx of older-skewing publishers as well, most recently The Economist, who launched a weekender edition on Discover earlier this month.