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Snapchat too, under tremendous pressure to show good results in the second quarter, recently gave advertisers bonuses, discounts, and media credits, as Digiday reported.

According to Bryan Wiener, the executive chairman at the agency 360i, this is just Facebook's "standard operating procedure." "They run beta tests with a select group of premium advertisers all the time," he said.

Instagram appears to be turning the screws on Snapchat, luring marketers and advertisers by offering them a chance to test new ad products free.

Morgan Stanley — the lead underwriter on Snap's initial public offering — released a bombshell note on the company this week, downgrading the company and lowering its stock price target by 42% to . The note also may have lifted the lid off of one of Instagram's tactics as it takes on Snapchat.

In other words, Instagram is attempting to restrict Snapchat's growth not only by mimicking its core features at a rapid clip but also by luring advertisers to run ads on its platform with free trials, credits, and discounts. The aggressive move by Snap's chief rival comes at a delicate time for the newly listed social-media company.

Advertisers are questioning the efficacy of their ad spending with Snap, and Wall Street is starting to question the company's ability to deliver on the lofty growth targets baked in to the company's stock price.

Snapchat's a tool that can be used for fun, instant connections with loved ones.

of stock-based compensation expense, primarily due to the recognition of expense related to RSUs with a performance condition satisfied on the effectiveness of the registration statement for our initial public offering.The analysts detailed Snap's woes and put the blame squarely on Instagram, calling it "likely to be more disruptive than previously expected." They also said that Instagram was "giving advertisers sponsored lenses for free." Instagram launched its version of lenses, called face filters, in May.Business Insider spoke with six advertising executives about Instagram's strategy, and while they were unable to confirm that free trials were being offered for sponsored lenses, they said Instagram regularly looked to incentivize advertisers to spend more on the platform by offering them free chances to test new ad products or credits to cover production costs.A third media buyer said Instagram and Facebook didn't always necessarily apply credits just toward ad inventory.They may instead apply credits toward the costs that come up while producing the ads for the platforms, for instance, or offer support with free customization.

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