Snapchat unveils new ad placement options to bolster its advertising business

In a recent communication to the Snap Inc. team, CEO Evan Spiegel highlighted the company’s significant milestones and introduced new strategies to bolster its advertising business. As Snapchat marks its 13th year, the company is not only reflecting on past achievements but also setting the stage for future growth, particularly in the realm of digital advertising.

Over the past year, Snapchat has reversed a two-year trend of declining revenue growth and is now on track to achieve record annual revenue. This turnaround, as Spiegel noted, is a testament to the team’s perseverance and strategic focus. The company has also seen a remarkable 25% increase in global content engagement, expanding its community to over 850 million users. Despite these successes, Snapchat’s advertising growth has lagged behind its competitors, prompting concerns from investors.

Spiegel explained that the slower growth in Snapchat’s advertising sector is largely due to a strategic shift from relying on a few large brand-oriented advertisers to a broader base of small- and medium-sized businesses. This evolution has seen a 16% increase in lower funnel direct response revenue, despite a 1% decline in upper funnel brand revenue. The CEO emphasized that lower funnel revenue, tied closely to business objectives and return on ad spend, offers a more predictable and stable growth path.

To accelerate growth, Snapchat is launching new ad placements designed to leverage the unique ways users engage with the platform. The company plans to introduce Sponsored Snaps and Promoted Places, two ad formats that integrate seamlessly into the Snapchat experience. Sponsored Snaps will appear in users’ chat inboxes, allowing advertisers to engage with potential customers directly, while Promoted Places will utilize the Snap Map to drive foot traffic to businesses.

These new ad options come as Snapchat continues to invest in machine learning (ML) and automation to enhance ad performance. The new ad placements are part of a broader effort to diversify Snapchat’s advertising strategy and capitalize on the platform’s unique strengths.

Spiegel also touched on the broader impact of Snapchat on user well-being, citing recent studies that show Snapchat as a positive force in users’ lives, particularly among adolescents. Unlike other social media platforms, which have been linked to negative mental health outcomes, Snapchat has been found to foster stronger friendships and overall well-being.