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It’s been a creepy week for Snap. On Tuesday, it lost two senior advertising executives — chief commercial officer Jeremy Gorman and vice president of sales Peter Naylor — who were poached by Netflix to lead the streaming giant’s New advertising business. (Both are key figures in the advertising industry and have been instrumental to Snap’s growth over the past few years.)
- Snap has long been testing AR lenses internally and through partnerships
- Brands are increasingly testing Snap’s AR capabilities to move beyond social commerce and into VR
- Snap can quickly experiment and launch new AR products and formats
On Wednesday, the company announced it was laying off 20% of its workforce — about 1,200 of its current 6,400 employees — as the wider business part of the reorganization. Other changes include shelving various other projects, including the self-flying Pixy camera drone, updated standalone apps including social mapping app Zenly and music-centric platform Voisey. Snap will also stop producing new content for Snap Originals, but will keep shows that already exist, and put its mini and game offerings into “maintenance mode” while reducing investment. Despite Snap’s major restructuring, marketers say the company has an opportunity to refocus the social platform on its key differentiators, such as augmented reality. This seems to be part of the plan. In a memo to employees this week, Snap CEO and co-founder Evan Spiegel said the merger is a renewed focus on three core areas: “Community growth, revenue growth and enhancement Reality”. (Snap estimates total savings from the restructuring will be about $500 million compared with the second quarter of 2022.) The company has promoted some executives as part of the change. Jerry Hunter, who joined the company six years ago after nearly a decade at Amazon, has risen from senior vice president of engineering to chief operating officer. Ronan Harris, who will lead Snap’s EMEA efforts, will also be joining from Google, where he was vice president and managing director for the UK and Ireland. “I believe that Jerry’s promotion will lead to better short-term execution as well as higher long-term innovation velocity,” Spiegel wrote. Over the years, Snap has pioneered the use of augmented reality lenses through internal efforts and partnerships with creators and brands. According to Steven Moy, CEO of ad agency Barbarian Group, Snapchat’s augmented reality feature is “almost like version 1.1 of the Metaverse,” which is becoming more and more popular as brands move beyond social commerce into virtual reality. The more brands are testing it, the more engaging Snapchat becomes. “It’s kind of like an entry-level metaverse,” Moy said. “You don’t need to go all the way down to Decentraland and a lot of metaverse experiences that are still a little clunky.”
Several advertising executives noted that Snap was able to rapidly experiment and roll out enhancements New offerings in reality and other formats, giving it the opportunity to play a bigger role in driving content innovation. (It also gives it an edge in the clone wars of other social networks.) In an interview last month about the wider social media landscape, Ellie Bamford, R/GA’s head of global media and connections, said Snap has been smart. Rapid innovation and diversification. “They’ve done a lot of work trying to see these pockets that can provide value and penetration,” Bamford said. “It’s smart, and I certainly don’t think Snap is dead, out of the game, or irrelevant. Their product The development team is fantastic.” Forrester’s principal analyst Kelsey Chickering said Snap has been an industry leader with various features including augmented reality. However, she said it couldn’t keep up with TikTok’s “addictiveness” or “capture the same magic.” According to Forrester’s 2022 Media and Marketing Benchmark Survey, 42 percent of U.S. online adults ages 18 to 25 said they thought TikTok was an “addictive” platform, but only 21 percent said the same about Snapchat. “Advertisers don’t use Snapchat with the ‘always-on’ social media budget that Meta does,” she said. “Snapchat is a great seasonal or tentacle-based activation channel, making it a media plan. One of the ‘nice to have’ programs in the market. The economic uncertainty that marketers are living in will allow them to focus more on proven, authentic, hard-working channels and leave platforms like Snapchat behind.” Despite Snap’s recent woes, some marketers are praising the results they’re seeing on the platform. For example, New Balance chief marketing officer Chris Davis said it remains the top US platform for New Balance fashion and lifestyle products. The platform continues to outshine other social networks in terms of return on ad spend and impressions, especially with lower funnel marketing, he said. New Balance, which has been a beta testing partner for Snap’s new technology last year, teamed up with Jolly Rancher for an augmented reality campaign starring NBA star Kawhi Leonard for its limited-edition sneakers. (The campaign reached more than 7.3 million users and sent 250,000 messages to the brand’s website.) “Their team was eager to incorporate us into new programs and technologies, such as AR activations in the past,” Davis said . “We’re also seeing an increase in brand favorability in these launches.” Vinny Rinaldi, head of media analytics, data and technology at The Hershey Company, said Snapchat still continues to attract “a lot of eyeballs and money spent on the platform.” time” — especially since the era of shifts in buying behavior — and the chocolate company’s marketing continues to work on the platform. “I wouldn’t say Snap is doomed in any way,” Rinaldi said. “Like everyone else, ad tech headwinds are real, and based on market dynamics, we’re seeing hiring freezes and companies laying off staff, but many of these companies are overvalued by the market in the first place.”