What’s Next for Snapchat: Will ‘Less’ Be More in 2024?
February 6, 2024—What will 2024 look like for Snap Inc.? After listening to the company's Q4 earnings conference call with financial analysts, here is what is coming next.
1️⃣ Less brand ads, more direct response*.
Brand advertising revenue sank 3% year over year (see p6), while direct response revenue grew by the same amount. Total revenue was flat year over year (even though monthly users passed 800 million and daily users rose 10%). Going forward, I expect Snap to lean even more heavily into direct response advertising.
*If Snap can bend grammar rules, so can I. 👍🏻
2️⃣ Less AR, more AI.
In past calls, AR took center stage. On this call, there was very little talk of the tech that has defined Snap basically since its inception. To be fair, there wasn't an overwhelming amount of discussion of AI either. Most of the references had to do with machine-learning advances in the underlying adtech infrastructure, and a smattering of commentary about the generative AI tools My AI users can tap into. But since every other tech company is racing to demonstrate its AI prowess to the market, Snap has to do the same, even though AR is still its most unique attribute among social platforms.
3️⃣ Less Rest of World. More North America and Europe.
This was a puzzling change for me. Snap plans to shift its focus toward growing its user base in North America and Europe (see p4). Its Rest of World region is going gangbusters, with DAUs up 35 million year over year (vs. just 4 million in North America and Europe combined).
But RoW is obviously not where Snap is making money, hence the focus on the mature regions. (And also, hence its expensive new ad campaign "Less social media. More Snapchat.")
North America user growth has been pretty stagnant for the past several quarters, a sign that Snapchat is already pretty well penetrated in its core demographic of teens and young adults. So where will it look in order to restart growth? Execs didn't say this on the call, but the tone of the ad campaign leads me to believe that Snapchat wants to broaden its appeal to a slightly older crowd.
