Snap plans to prioritize the expansion and diversification of its underperforming advertising business, with a particular focus on augmented reality, CEO Evan Spiegel told employees in a note on Tuesday.
The announcement comes during a difficult period for Snap, as it faces stiff competition from major social media platforms like Meta’s Instagram and Bytedance’s TikTok, which are vying for advertising revenue.
Addressing concerns about Snap’s lagging share price, Spiegel explained, “Despite the progress we’ve made over the past year, our advertising business is growing slower than our competitors.” Earlier in August, Snap issued a weak forecast for the current quarter, attributing it to a reduction in advertising spending. The company is now expected to report fiscal 2024 revenue of $5.34 billion, according to LSEG data.
So far this year, Snap’s stock has declined by approximately 48%.
In response, Snap plans to overhaul its market strategy by introducing new ad placements powered by machine learning and automation. Additionally, the company is investing in augmented reality technology and developing smart glasses, similar to those being created by Meta. “We are investing in creating augmented reality glasses that allow people to interact with computing, the world, and one another in totally new ways,” Spiegel noted.
In June, Snap also launched generative AI tools that enable users to apply more realistic effects while filming themselves with their phone cameras.
