Snap, the parent company of popular messaging app Snapchat, has unveiled new strategies to increase the use of artificial intelligence (AI) and expand beyond its loyal user base to reach profitability without losing its identity as a fun, ephemeral messaging service.
At its annual conference, Snap CEO Evan Spiegel revealed that an average of 750 million people use Snapchat each month, with the majority of users aged between 13 and 34 in over 20 countries. However, unlike Meta’s “family” of apps, including Facebook, Instagram, and WhatsApp, Snap has struggled to generate enough advertising revenue to turn a profit. In 2021, the company’s net loss tripled to $1.43 billion, and it laid off 20% of its workforce.
To attract more creators to the platform, encourage users to pay for subscriptions, and convince advertisers that Snapchat is a valuable platform, Snap presented new tools and products. However, as it seeks to make money, the company must remain careful not to stray too far from its roots as an ephemeral and fun messaging service.
According to analyst Jasmine Enberg, Snapchat needs to strike a balance between private exchanges, public spaces, and the sense of community and intimacy that it has cultivated since its inception.
Snapchat became a pioneer in using images instead of words to communicate and playfully augmenting reality with AI “lenses” a decade ago. The platform also invented “stories,” a way for users to put “snaps” taken throughout the day into a visual tale. However, Creative Strategies analyst Carolina Milanesi believes that Snapchat is not attracting the attention of regulators, unlike TikTok and Meta.
Despite this, Snap CEO Evan Spiegel cast Snapchat as a break from the “social media popularity contest” and a place to enjoy authentically communicating with friends and family. The app opens by default in a smartphone camera, allowing users to take photos or videos with or without filters to augment reality. Such “snaps” can be shared publicly on Snapchat or privately with those in one’s selected circle.
Snapchat is also out to woo influencers, whose posts attract viewers and advertisers. Snap Vice President Jack Brody stated that creators find Snapchat a place where they can “express their authentic selves.” However, Snapchat is not considered essential by most social media influencers, and they tend to put their energy into making money on Instagram and TikTok.
To win them over, Snap presented more ways to be noticed and share in ad revenue. The company also gave more details about ARES, its new business unit that will provide a suite of augmented reality tools for online retailers.
As Snap works to expand its user base and reach profitability, it remains to be seen whether the company can strike the right balance between profitability and its roots as a fun and authentic messaging service.
