Snap is trying to capitalize on its killer earnings by launching a direct assault on Instagram

• Snap is trying to capitalize on its killer earnings by launching a direct assault on Instagram.
• The company is offering free advertising credits worth “several hundreds of dollars” to attract new advertisers – specifically those buying vertical video ads on Instagram, Recode first reported.
• The hope is that offering such credits would enable the company to attract more small advertisers, and eventually jack up ad prices and eventually boost revenue.

Following a surprising strong quarter, Snap wants to keep the momentum going by wooing advertisers from its arch-rival Instagram.

The company is offering free advertising credits worth “several hundreds of dollars” to attract new advertisers – specifically those buying vertical video ads on Instagram, Recode first reported. A Snap spokesman confirmed the news to Business Insider.

Snap began offering the free ad credits to advertisers running vertical video ads this week, the rep said. Snap’s sales team as well as partners are reaching out to advertisers to notify them of the offering.

They are directing advertisers to a web form called “Accelerate for Social,” which requires brands interested to upload evidence in the form of a proof of purchase that they bought ads from a Snapchat competitor within the past three months.

While Instagram Stories unsurprisingly remains Snapchat's biggest rival in the mobile-friendly vertical video ad space, the format is also used by Pinterest and mobile publishers like AdColony, ChartBoost, and Vungle. So brands that have run ads on any of those platforms can participate.

The outreach is primarily targeting advertisers who focus on direct response (such as urging people to install apps or purchase items on the web) as well as other mid-market advertisers, the spokesperson said. Snap, in other words, is taking a page out of Facebook and Google's playbook, both of whom have racked up ad spending from millions of small advertisers using their respective automated platforms.

Snap doubled its total revenue from app install campaigns since the beginning of the fourth quarter, and also decreased cost per installs for its advertisers, chief strategy officer Imran Khan said on the earnings call this week. It also drove 15 times more app installs in December compared to April. So it's no wonder then that it is doubling down on these ad formats.

While Snap's 2017 fourth quarter earnings were a welcome relief for the company, it knows that it must continue to increase its roster of advertisers.

90% of all its ads are now programmatic, or are sold through automated software that auctions off ad spots to the highest bidder. But there aren't enough advertisers bidding for these spots, so the prices remains low. Offering such credits and bringing more brands on board would theoretically enable the company to jack up ad prices and eventually boost revenue.

This is not the first time that Snap has attempted to lure advertisers with free trials and credits. In October, for instance, it launched a dedicated benefits program called "Snap Accelerate" to incentivize startups to advertise on the platform. It has also been aggressively targeting smaller businesses in recent months, rolling out a number of self-serve platform and product rollouts.