Snapchat will focus on expanding and diversifying its underperforming advertising business, focusing on augmented reality, Reuters reported on Wednesday.
Reuters reported that Snapchat CEO Evan Spiegel made the announcement amid a challenging time. The company competes with major social media players such as Instagram, its parent company Meta Platforms and Bytedance’s TikTok for advertising revenue.
“You may be wondering why, with all of the progress we’ve made in our business over the last year, our share price performance has lagged the overall market. The answer is simple: our advertising business is growing slower than our competitors,” the report said, quoting a note from the CEO.
At the beginning of August, Snapchat was estimated to have a weak forecast for the current quarter due to a decrease in advertising expenditures. The report, citing data from LSEG, now estimates that Snapchat will report revenue of $5.34 billion in the 2024 fiscal year.
The company’s stock has fallen around 48 per cent so far this year, the report said.
The CEO said the company plans to experiment with two new formats: ads in the chat inbox and on Snap’s map feature. According to a Bloomberg report, this is the first time Snapchat is trying to monetize its popular maps feature, which allows users to see friends’ locations in real-time.
Snapchat to revamp marketing strategy
The Reuters report said Snapchat is also planning to revamp its marketing strategy by introducing new ad placements powered by machine learning and automation. Like its contender, Meta, Snapchat will also develop augmented reality and smart glasses.
“We are investing in creating augmented reality glasses that allow people to interact with computing, the world, and one another in totally new ways,” the report quoted the CEO’s note.
In June, Snapchat launched generative AI tools that allow users to apply more realistic effects when using their phone cameras to film themselves.