After a year of lackluster growth, Snapchat appears to be staging a comeback.
The social platform posted better-than-expected revenues and user gains, adding 13 million daily active users during the second quarter of 2019 — its highest jump since 2016. Sales also rose 48% year-over-year to $388 million, while Snapchat shrank its profit losses to 19 cents per share. (Wall Street had expected a top line of $360 million and a loss of 22 cents per share.)
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In a call with investors, chief business officer Jeremi Gorman explained that the Santa Monica, Calif.-based company “believe[s] the single biggest driver for our revenue in the short to medium term will be increasing the number of active advertisers using Snapchat.”
Among its newer innovations in the ad space are the addition of six-second, non-skippable commercials on its Discover page, which expanded its audience to 35% year-over-year. Snapchat has also invested in sponsored, augmented reality features, with users spending an average of 10 seconds simply interacting with the photo lenses.
“To engage the Snapchat audience, advertisers need effective ads, easy buying and consistent, positive campaign results,” Gorman added. “To that end, we are focused on two fundamental priorities in our ad business: The first is to develop powerful ad formats that are both innovative and easy to create. The second is to show consistent, predictable results for our advertisers, driving measurable ROI and enabling them to optimize for the outcomes most relevant to them.”
In 2018, Snapchat recorded stalling figures amid a redesign that cost it millions of users as well as heavy competition from Instagram with the growing popularity of Instagram Stories. But this quarter, it reported that the average number of Snaps created each day climbed to more than 3.5 billion from 3 billion, with each user spending an average of 30-plus minutes a day.
With more than 75% of 13 to 34-year-old Americans regularly on the platform, Snapchat has achieved a widespread reach among the teenage and millennial demographics. The company also noted a greater focus on the Generation Z audience, with a recent study by Lab42 Research finding that Snapchat commands a little under half (48%) of the generation’s social media engagement — below only YouTube and Instagram.
“As the younger generation continues to lose interest in Facebook, Snapchat is taking mindshare,” e-commerce startup Zoovu CMO Claudine Bianchi told FN. “There will, of course, be an uptick in advertisers turning to Snapchat, as fashion retailers know that they’re hitting a core, targeted market through the platform. [It also] enables retailers to reach consumers at the point of decision — where users can buy an item quickly — satisfying millennials’ desire for immediate gratification.”
Snapchat’s expanded shopping features provide an unusual avenue for both advertisers and retailers to boost their presence and tap into new markets. Ten months ago, the company teamed up with Amazon to roll out a visual product search feature through which users could scan physical objects or barcodes that send them to the e-commerce giant’s website to make a purchase.
It also boasts a partnership with Shopify, launching its own e-commerce channel, “Shop and Cop,” during the holiday season. Available in the Discover section, it invited users to browse and buy from a limited-time selection of merchandise without leaving the app or being redirected to an external site.
“We are committed to helping these e-commerce businesses achieve their objectives by creating these rich experiences,” Gorman said. “There are hundreds of thousands of Shopify vendors that have storefronts that they can create in just a few clicks directly into Snap . . . and our customers can shop directly from that store.”
He added: “If you extrapolate that out into the litany of other e-commerce players that there are in the ecosystem, the opportunity is tremendous. And we will continue to double down both in product and sales to ensure that we capture that.”
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