Revenue woes force Snapchat to put ads in chat conversations
What's the story
Snapchat CEO Evan Spiegel has announced the company's plan to experiment with sponsored messages, or "Sponsored Snaps," within chat threads from friends. This new feature will mark the first time that Snap Inc., has introduced advertisements into its most frequently used section of the app. The sponsored content will be displayed as unread messages in the main Chat tab, positioned above personal messages until they are viewed or interacted with by users.
User interaction
User experience with Sponsored Snaps
The Sponsored Snaps will not be accompanied by a push notification and users have the option to open these messages or ignore them. However, it remains unclear how easy it would be for users to dismiss a sponsored snap without opening it. Spiegel emphasized in his memo that these sponsored messages are designed to enable advertisers to engage visually with the Snapchat community, while maintaining user privacy in personal conversations.
Financial outlook
Snap's financial performance and advertising strategy
Despite reaching over 850 million monthly users worldwide, Snap's advertising business remains small compared to major competitors like Meta. The company is yet to achieve profitability, with its stock price currently near an all-time low. "The growth of our digital advertising business is one of the most important inputs to our long term revenue potential," Spiegel stated in his memo marking the company's 13-year anniversary.
Advertising expansion
Snap to allow paid promotions on Map tab
In addition to Sponsored Snaps, the social media platform also plans to allow advertisers to pay for promoting locations on its Map tab. This feature is used by Snapchat users to track their friends' locations. The introduction of these new advertising strategies is part of Snap's efforts to boost its digital advertising business and increase long-term revenue potential amid investor concerns about the company's growth rate.