LOS ANGELES: An increasing number of advertisers are expressing frustration with Snapchat's resistance to allowing targeted ads on the video-messaging app.
As reported in the Los Angeles Times, industry insiders are saying that Snapchat's policy of limiting the ability of advertisers to mine valuable user data – a practice that Snapchat chief executive Evan Spiegel has described as "creepy" – could put its revenue stream at risk.
It is reported that several advertisers have warned that they will not increase their adspend budget to Snapchat without more enhanced targeting tools or effectiveness metrics.
Unlike rivals Facebook, Google and Pinterest, Snapchat so far has allowed only very limited ad targeting amid concerns that the technique could alienate its users.
But there are dangers too in alienating advertisers if Snapchat continues to rely so heavily on advertising revenue.
"They are going to need more revenue to support the evolution of the product," said Jeremy Simon, director of partnerships and business development at social media agency Attention Global. Ad targeting is "the way all the platforms eventually end up going," he added.
Douglas Kwong, digital director at restaurant chain CiCi's Pizza, agreed that minimal ad targeting capabilities makes it hard to justify the investment.
"I don't know if you can push … very far if you don't have the data," he said. "Otherwise, you're throwing money for impressions. It's a shot in the dark."
However, others in the industry remain more upbeat about their experience on Snapchat – and they include some big names, such as Coca-Cola.
"Snapchat has earned their keep at the table in terms of options we think about," said Emmanuel Seuge, SVP for content at Coca-Cola North America. "They are learning how far they can go [with targeting] and what that fine line is."
Data sourced from Los Angeles Times; additional content by Warc staff