Although Snap lagged behind its social competition in the past, the platform now aims to strengthen its business with an augmented reality focus \u2014 an element it\u2019s been steadily enhancing. Some say this immersive content can help the platform stay connected with young audiences and expand beyond traditional social media ads.<\/p>\n
In recent years, Snap has focused increasingly on its AR efforts. But the real question the company faces now is whether adding AR elements to its platform will help it continue growing in the face of competition and uncertainty.<\/p>\n
It is perhaps necessary for Snap to pivot to AR, much like Facebook and Instagram parent Meta eventually needed to diversify its slowing social media business. Plus, there have been challenges both for the company and across the industry. Last year, Snap lost key advertising leadership<\/a> who were poached by Netflix to lead the streamer\u2019s ad business, while the company laid off 20% of employees as part of a major restructuring.<\/p>\n Experts believe that there are growing use cases for AR to engage people, which could form a path back to growth for Snap. Some marketers have been testing AR as an easy way to experiment with the metaverse, which can attract younger audiences. They also point out that Snap\u2019s ability to quickly roll out and update these types of features makes the app more appealing over others.<\/p>\n \u201cIn a social arena plagued by chaos, Snap has been a steady, reliable partner,\u201d said Ben James, Chief Innovation Officer at data-driven media agency GALE. \u201cWhile the industry doesn\u2019t always appreciate steady versus the shiny new thing, it\u2019s Snap\u2019s focus [in AR] that has differentiated them from their competitors.\u201d<\/p>\n Even as the giants of social media experienced their first revenue slowdowns due to uncertainty in the economy and softness in the advertising sector, Snap outperformed some of its competitors and showed steady growth to its ad portal. For instance, Snap last quarter began to attract more traffic to its ad portal in October as Twitter\u2019s traffic decreased.<\/p>\n Specifically, traffic to Twitter\u2019s ad portal, which is different from activity on the platform, declined 19% year over year last October, while traffic to Snap\u2019s ad portal increased 47% year over year, according to intelligence platform Similarweb<\/a>. Traffic to Snap\u2019s subdomain for ad buying activity was also up 163% last October, as Tesla boss Elon Musk continued his takeover of Twitter.<\/p>\n With regulators still pursuing bans on TikTok, Meta apps stagnating in user growth and Twitter\u2019s future uncertain after Musk\u2019s acquisition, Snap may stand to benefit from its rivals\u2019 challenges. Based on its Q3 2022 earnings, Snap revenues increased a relatively meager 5.7% year over year to total $1.13 billion, with daily active users up 19% year over year reaching 363 million. But even as Snap differentiates itself as a leader in AR, it is likely years away from seeing a return on those investments. Snap is expected to report its Q4 2022 earnings on Jan. 31.<\/p>\n Yet, as agency executives explained, AR has the potential to help Snap attract younger users and let brands try out other forms of social ads on the platform. \u201cSnap\u2019s potential to produce experiences like this, combined with commerce enablement, would give them different ways to add value to young audiences,\u201d said James Townsend, Global Chief Executive of Stagwell Brand Performance Network.<\/p>\n Additionally, some AR content may have advantages over other forms of advertising, said James Addlestone, Chief Strategy Officer at performance marketing agency Journey Further.<\/p>\n \u201cAR executions typically involve the brand, or distinctive assets of that brand, to be ever-present throughout the experience, providing significant advantages for well-executed AR over, say, a static social ad or digital display, where attention is particularly low and subsequent brand recall is poor,\u201d Addlestone added.<\/p>\nAdvertising growth potential<\/h2>\n