Luke Kallis, Snap Inc. VP, Head of Enterprise US Sales, joins Cross Screen Media CEO Michael Beach to shares how Snap is innovating across augmented reality, online video, and targeted advertising in our latest Screen Wars Thought Leader Interview. Watch the interview here and read the full transcript below.
Michael Beach: Luke thank you for joining us today.
Luke Kallis: Thanks for having me. I appreciate it.
MB: Excellent. Well, let’s start with an icebreaker that we ask each of our guests. What was your first job, and what lessons did you take away from that applied to your career?
LK: It’s interesting; I didn’t realize what a metaphor it was until you asked it. I was a gardener and landscaper in Pleasanton, California, for some of my neighbors. When I look back on it, there’s a lot of startup in the job. You get there, you assess the situation, you have to plant a lot of flowers and, you have to organize your vision. Then you come in and you check on it and some of it’s going just how you want it to go, and then you got to take out some of the weeds and then you replant. By the end, you have this hopefully beautiful front yard or garden that accentuates the home.
That was reminiscent of how a startup is built in the maturation to building your durable business is inevitably you become public and evolve. So that was my first gig.
MB: Well, that’s interesting. As someone who grew up in Ohio, I’m assuming you’re able to do that year-round, and you weren’t shoveling much snow?
LK: No, no snow in Pleasanton, gladly circumvented that.
MB: I’m jealous. How’d you get your start in the media space?
LK: My first job was in New York, actually at salon.com, and it was extremely rewarding because at that point, honestly, you’re just excited to get any gig, but what was most exciting to me was what it stood for. They were trying to create one of the first digital independent newspapers, and I really loved the mission statement. I started out as an account manager and then quickly, within the first year, moved into sales and really enjoyed the offering and the content that was coming out of it.
It was also really inspiring because at the time, the writer’s pit and the staff were Arianna Huffington, Jake Tapper, and a bunch of visionaries that have gone on to do incredible things, and just being around them was really, really a nice moment to start my career.
MB: That’s great. Before we jump in deeper, do you mind giving our audience a little bit of background on Snap and what it’s been used for?
LK: Absolutely! We are a nine-year-old company in application and now platform. When you think about Snapchat, we’ve literally had the same mission since our first day. We want to empower people to use our camera to connect friends and family and to learn about the world and empower creativity. That’s why when you open the app to this day, it still opens to the camera, and we’re really excited about the platform we’re building.
Just this year, actually, we launched our Action Bar, which is a fancier term for navigation. We still open to the camera, but when you swipe to the right, you can go to our Discover platform and get some incredible content from some of the world’s leading content partners.
You can swipe again to get to our Spotlight section, which has a lot of social performance going on, as well as a great way to highlight the creators on Snapchat. Then you go to the other side of the app to the left of the camera is or our chat, where we’re connecting friends and family. Last but not least with one more swipe is the Snap Map, and where you can learn and understand where your friends are.
We have always been very focused on privacy by design. That’s why everything you do is ephemeral and it disappears. We don’t have comments on the platform because we want to create a place for non-judgment. And we’re still sticking to our mission statement to this day, which is exhilarating, as I often think about how forward-thinking Evan and Bobby were when they built the app. Because so much of what they’ve put in today has become important globally and at such a unique time that we’re living in. It’s really wonderful that they built the app almost ahead of its time and some of our core tenants are now proliferating.
MB: Yeah. We’re recording this in early February and obviously, Snap’s an incredible leader in camera technology and augmented reality. And I think in the last week we had somebody appear in court where they, through Zoom, another program, left their cat filter on, and it’s just hard to believe how mainstream that has become when you basically invented that. I mean, it’s been incredible.
LK: We have over 200 million people who were using augmented reality now a day and it’s just a really staggering stat how much it’s become commonplace. One of the things that I thought was really interesting during the pandemic has been how much our augmented reality is proliferated, and I obviously saw the same thing as you did. I saw that the CEO of Taco Bell actually announcing their return of potatoes as a potato using our snap camera. And you think about how those worlds could combine, it’s really been a special ride to see augmented reality taking off the way it’s been.
MB: Absolutely. I want to dig in more into the Discover feature in a second. Looking at your audience as a whole, give us some background on the scale and what they’re doing? I think it would be helpful for our audience.
LK: We’re very fortunate to have an incredibly engaged audience of 265 million daily active users. They spend about 30 minutes on the app a day. So they’re checking frequently and they’re communing with their real friends and family. When you think about the scale of the audience and the time that they’re spending, we really become a digital extension of their life.
MB: Digging into the Discover feature, I’ve worked with Peter Hamby in the past and I love Good Luck America. With the work you’re doing with originals from Will Smith, Ryan Reynolds, and many others, how does this fit into the overall plan after for user experience?
LK: The content Discover section is one that has really grown exponentially and especially during COVID where people are at home and they have more time to spend. Over 90% of the US Gen Z population watched publisher content in Q4 of 2020. So a tremendous amount of consumption and when you think about what we’re trying to accomplish there, we want to bring in the ecosystem of what’s interesting to people and do it in a curated fashion.
What really differentiates us is that you’re not going to go into Discover and get anything that’s toxic or anything that hasn’t been vetted. When you talk about those shows like Good Luck America and Will From Home, those are obviously big celebrity names, but even the content from our other partners is really, really curated to make sure that it’s brand-safe and right for our users.
One of the other things that’s been a huge boom for us is taking programs that existed on more traditional linear television and now bringing them to our Gen Z and Millennial audience. On any given day, Snapchat reaches 90% of all 12 to 24 and 75% of 13 to 34-year-olds. I’m a sports fan and I used to watch ESPN and SportsCenter on TV, like everybody else. But on Snapchat, you go in and there’s a five to eight-minute version of SportsCenter made for Snapchat. It’s made in a very Snappy way and, “Hey Snapchat.”
It’s done where you’re getting the information and the highlights and the quick hits really quickly and where we’re placing a lot of that linear experience in a format, full screen, full video that our audience has really leaned into and is voting with their thumb, like remote, “Hey, I want that content, but I want it a format that is really relatable to me.”
MB: An area that we talked to a lot of people about is obviously original content and how that’s going to play and the other is the role e-commerce and shoppable ads going to have in the future. I’m really interested in your offering because you’re making that happen today. You’ve got the original content feature, obviously, you’ve got the ability to engage in e-commerce right in the app. How do those play together?
LK: There’s a multiplicity of ways and when you think you’re staying on the augmented reality trap, one of the things that’s really taken off is virtual try-on. As I stated earlier, we’ve got 200 million people a day using augmented reality.
Staying on that sports track, a good example is when the Rams came out with their uniform, you were able to actually try the Rams’ uniform on in realtime as an extension of them releasing it in media. That goes the same for clothes. We just did a pop-up shop with American Eagle, which was really well-received augmented reality. You can try sneakers on via chance actually on your feet to make sure you have the right shoe. And so when you think about where commerce is going, virtual try-on makes so much sense to augmented reality and I think we’re at the infancy of that.
When you really look at usage, as well as thinking about where is commerce going in the future, obviously, a lot of that has to do with our ad stack and where we’re taking that as far as collection ads, making sure that we’re finding the right people through our dynamic product ads to drive business outcome on the commerce level. So you really had this really nice top-of-funnel trial and awareness, and then the bottom of the funnel driving towards business outcome.
MB: Looking at your earnings for the end of the year, one area that really stuck out to us was 40% year over year growth in revenue per user in North America, a market you’ve been in for nine years. To see that kind of continued revenue growth is interesting. One theory that we have is that when commerce and video collide on the advertising side and media isn’t priced at the impression level, but it’s really priced on a business outcome or an event, that number could skyrocket. Has your revenue per user or per hour taken off and is that how you see the future?
LK: I think where we’re investing is to build a scalable and durable business and we’re going to invest in our sales and marketing functions. We think that’s incredibly important to train and hire and build for scale. We’re driving ROI, to your point, through our measurement, relevance, and our optimization. Over 50% of our revenue on Snapchat now is actually DR and so we’ve been building our auction for years now and we take it incredibly seriously, but we need to help our advertisers drive business outcomes.
I talk a little bit in the previous question about building the right ad formats. As you talk about augmented reality, that’s really where the future lies. We think about the funnel, and we all talk about the advertising funnel. I think when you look at the top of the funnel with awareness, augmented reality is such a great place to live there, to try it on and experience it.
You think about the middle of the funnel, you’ve got videos telling great narratives, and then at the bottom of the funnel, we have our Snap ads and our story ads really helping validate and making sure that there’s not just a funnel, but what we think is more of an evolution where there’s a loop. I think that’s a big differentiator for us, where all of our products work together to your point. And of course, that will drive an increase in ARPU, but we’re really at this nice coordination point where our platform is maturing into a really valuable tool for advertisers, irrespective of the goal that they’re trying to achieve.
MB: Right. And we talk a lot about cross-screen buying and selling for video, a couple of questions on that. One, where does Snap fit on the media plan? What is your typical buyer look like and what is the goal?
LK: It’s really interesting because it’s evolved. When we first started, we were extremely brand, just due to the fact that we were in an IO-based business. We were experimental. I’ve been at the company almost six years and that was our initial shiny pop culture phase.
As we’ve matured – and I talk about 50% of our business being DR, we really lean into our auction because of that. We definitely fit into the social programmatic bucket. We talked to a multiplicity of buyers there and we’re constantly using our goal based bidding to drive the outcomes and return on ad spend that they see or to work within the measurement context and framework that they validated against, depending on the vertical we’re working with or the brand we’re working with. That’s a core function.
We’ve also been significantly moving into the OLV bucket as well and I think we’ve seen continued cord-cutting and the TV stats this year on consumption deteriorating. There’s actually a great eMarketer article that came out recently talking about the degradation of 10 million more Americans cutting the cord from a consumption standpoint. As linear moves over into OLV, I think that’s a huge opportunity for us as we sell what we call our “commercials,” which are six-second forced view ads. So that bucket is somewhere that we’ve been really, really focused on. And then we still have, of course, the brand bucket, which is the OG and that’s where augmented reality lives today.
But what’s really interesting to me is what I think is the creation of the fourth bucket, and I think one of the reasons I love working at Snapchat is we’re such a pioneer and we really focus on innovation. And one of those innovations, I think, that’s going to be a part of our legacy is the creation of AR as a bucket and it’s at its infancy. It’s great for trying on right now, but you can actually step into a different world through augmented reality. We did that with Stranger Things 2 where you could actually enter the world.
I think there’s so much ahead for all these brands to understand where augmented reality fits in, and that’s what I’m most excited about; the future creation of said bucket. We’ve got a small but mighty team calling across the landscape of those three today.
MB: Excellent. I have a couple more questions. What else is on the horizon on the ad front?
LK: We’re going to continue to invest in some of our more new platforms like Spotlights, like our Snap Maps. I think those are areas. Our Snap Games is doing really well as well. But these are just at the beginning of their journey. We have over 250 million users engaging with our Snap Map every month. So even though it’s at the beginning, and was recently promoted into our Action Bar as a partner platform, there’s still a lot of work to do there and I’m excited to see where it goes.
MB: Looking at the video ad marketplace as a whole, what’s the single biggest change you’ve seen in recent years?
LK: I think the biggest change in the video ad marketplace has been the adoption of full-screen, vertical video ads on mobile. I think when we move over from the horizontal to the vertical and understand that the proliferation of mobile to be the largest content consumption happening now through all the different mediums. We pioneered that, as I said, we pioneered many other things, so it feels like a self-serving answer. But when you think about how everybody’s optimizing now and how the actual, it’s not only Snapchat or the generational Gen Z and Millennials that are voting on consumption, that’s been a big transition for us. Three out of four of those Gen Zs and Millennials feel like it’s more personal, 76% of them when it fills that screen, and 74% of them feel like it’s more immersive.
I think that shift is going to continue to drive a lot of different change as that younger generation continues to age up and their habits become proliferating and the new habits of all generations.
MB: Absolutely. And the other side of the coin, which development are you most excited about moving forward?
LK: I’m tempted to say Spotlight because it’s our newest expansion. We did 100 million monthly active users in January. So it’s coming out of the gate really strong and we’re excited about that. But as you can tell throughout the conversation, I’m very passionate about augmented reality and I think that’s where I think things are going to go.
To create a through-line in the whole conversation, I love the Superbowl. Irrespective of who you are as a fan, everybody tuned in for the commercials. One of the moments that I think is a harbinger for the future is what was happening on our platform. So we saw over 200 million times Snapchatters engaged with our AR lenses during the super bowl.
So you would go and watch the Cheetos, the Doritos, the Tide Out of Jason Alexander’s face on the shirt, among others. Uber’s Super Bowl commercial is a great example for Wayne’s World. I was able to watch the ad and enjoy it. When Wayne’s World came on, I looked over at my wife and I opened up Snapchat and I showed her the actual augmented reality Uber created that complimented that and transformed her into a Wayne’s World character.
You think about that awesome through-line of, “Hey, here’s the message, here’s the fun in the commercial, but why don’t you actually experience that ad as an extension of what’s happening on the TV?” The other brands I mentioned all had very similar executions, so when I talk about augmented reality being nascent and becoming another bucket, I think we saw a great use case during the Superbowl.
I’m most passionate about that and I’m sort of geeking at home, not to expose myself, but I love technology and I love thinking about the future and I really fundamentally believe in the real world and, the virtual worlds are going to continue to overlap on each other. I’m excited about that just as a consumer, but I’m also excited about that for the Snapchat business.
MB: One more question we ask all of our guests – if you could get your whole team to read a book right now, what book would it be and why?
LK: I feel like you planted this for me, because I literally just had an entire team read Cracking the Sales Management Code by Jason Jordan, and it’s about the importance of frontline managers and thinking about how do you operationalize the business and what are the inputs that are going to drive true change? I think when you think about sales management, there’s not a tremendous amount of content or books written around it. This one is very modern and I thought it to be very forward-thinking.
The team just finished reading it, and we’re actually spinning up some training right now based on how we can optimize our business around some of the learnings that we’ve found in the book and then “Snapifying” it.
On the personal front, I’d have to say the book that stuck with me the most that I read about a year ago is Range by David Epstein, and it’s about why generalists are actually doing really well in the world right now. I think it’s like the anti-Malcolm Gladwell Outliers and the 10,000 Hours.
The reason I love Range is it’s all database arguments around, “Hey, you can spend your entire life trying to master this one thing and you will be great at it and people will tell your story because they love the narrative of somebody that’s dedicated their lives to accomplishing something. But you can also do 10 different things and later in life really find yourself and be multifaceted and still accomplish greatness.”
The through-line on that was Tiger Woods at the beginning of the book. Because I don’t want to spoil it, we’ll talk about the top. You also have Roger Federer, who was doing all these different things before he went on to dominate tennis. So I really thought it’s an important lesson to give.
I liked both philosophies, but coming out of the last year that we all just went through, I’ve really been focusing personally on how you find balance in your life and how can I be a little bit more multifaceted in all I do to just bring joy to myself and the others around me? So Range, really, really stuck with me.
MB: Two great recommendations. I’ve really enjoyed the talk and I’m sure our community is going to love the conversation. So I want to thank you for your time.
LK: I really appreciate you having me on, and I hope you have a wonderful day.
MB: Thank you very much.
See the rest of the Screen Wars Thought Leader Interview series here!
Luke Kallis is the Head of US Enterprise Sales at Snap Inc. In this role Luke oversees all advertising sales and market strategy for the company’s 9 Enterprise Verticals and subsequent 19 Categories. Luke joined Snap in 2015 and is also responsible for fostering his team members to deliver advertisers the highest quality experience, service and delivered results possible. Luke aided in ideating, managing and delivering many of Snap’s earliest sales initiatives and strategies against its pioneering product set of Filters, Lenses, Snap Ads, Story Ads and Commercials.
Previously, Luke was Senior Vice President, National Sales at VEVO, leading that team’s sales force and monetization efforts as well as its various support divisions. Prior to joining Vevo, Luke held multiple positions at Fox Interactive Media, including Executive Director of Entertainment Sales at MySpace where he was on the forefront of interactive sales and advertising. Luke has also served as Director of Sales at Facebook, as well as held sales positions at IGN Entertainment and Salon Media Group. Luke has been included in the AdWeek Top 50 List of Vital Tech Leaders in Tech, Media and Marketing. He resides in Manhattan Beach, CA.
Cross Screen Media is a marketing analytics and software company helping brands, agencies, and networks succeed in the Convergent TV space. Our platform creates a common currency across linear TV, digital, and CTV views so ad buyers can build a single optimized plan and sellers can prove the value of their inventory. For more information, please visit our website.