As Snap Inc. woos Wall Street ahead of its initial public offering, the parent of the popular messaging app is also spending plenty of time courting another constituency: advertisers on Madison Avenue.
The Venice, Calif. company is in talks with the media-buying arms of several big advertising companies, including WPP PLC, Omnicom Group Inc., Publicis Groupe SA, and Interpublic Group of Cos., and is seeking ad-spending commitments of $100 million to $200 million for 2017 from each firm, according to people familiar with the discussions.
That would be roughly double or triple the amounts the ad companies spent last year. Snap is looking for yearlong and in some cases multiyear deals, the people say.
Such agreements typically are only a promise to spend a certain amount and aren’t binding contracts, ad executives said. Still, securing the deals would give the five-year-old company a welcome boost as it pitches itself to public investors and tries to live up to a valuation that could be as much as $25 billion.
Wall Street will be looking for assurances that Snapchat’s legion of young devotees—it counts more than 150 million daily users—will translate into a giant ad business. Snapchat sells vertical video ads that run in between content from media outlets such as Cosmopolitan, Vice, CNN and The Wall Street Journal, and specialized ads that brands use such as sponsored lenses and geo-filters. eMarketer estimates the company generated $367 million in ad revenue last year. This compares with Google’s ad revenue of $63 billion and Twitter’s $2.26 billion, according to eMarketer.
Snap’s chief strategy officer, Imran Khan, has been the company’s lead in its IPO process, given his background as a former head of internet banking at Credit Suisse Group AG. But in recent months he also has invested significant time in wooing ad executives, people familiar with the situation say.
His key lieutenant in that endeavor has been Jeff Lucas, a former executive at media giant Viacom Inc., owner of cable channels such as MTV and Comedy Central. Snap lured him last summer and made him…