Some Snap streaks have outlasted even the best friendships, and that’s the kind of lasting impact SnapSNAP

is aiming for in its business strategy. The company is pulling out all the stops to regain its edge in the cutthroat social media arena. With its stock price down 34% this year, the photo and video messaging app hopes a makeover will help it reclaim market share lost to rivals like MetaMETA

and TikTok.

Less is more: Snap’s new redesign, dubbed “Simple Snapchat,” intends to streamline the user experience by reducing its five-tab layout to a more digestible three-tab format — hoping to make it easier for creators to monetize content. The app’s monthly active user base has already swelled to 850M, and users are now spending 25% more time on video content compared to last year. With increased engagement, the business plans to fill users’ feeds with more ads and midroll content. However, the success of this redesign depends on finding the right balance between simplicity and functionality without driving away its core users.

• Snap is investing ~$1.5B this year in AI and machine learning to improve its recommendation algorithms, aiming to capture more screen time from Gen Z and boost ad revenue.
• In response to the rise of TikTok and other short-form video platforms, companies like Snap and Meta are adjusting their algorithms to showcase user posts to a broader audience.

The Ad-venturous Journey

Snap projects its revenue will rise to $5.35B this year — up 16% from last year, according to Bloomberg. Much of this growth is driven by advertising, as the company has started adding new ad blocks in previously unused areas like the chat inbox and Snap Map to increase revenue. Despite this progress, Snap’s stock has dropped nearly 55% since its 2017 IPO. Additionally, the influencer marketing platform also reported a net loss of $249M in the second quarter of 2024, attributed to slowing sales amid “a weaker brand advertising environment for certain consumer discretionary verticals.”

• CEO Evan Spiegel acknowledged the challenges of business progress and stock performance, stating, “The answer is simple: Our advertising business is growing slower than our competitors.”
• This month, he informed employees that the content creation hub has halted its revenue decline from the past two years and will continue to focus on ad earnings by targeting smaller advertisers.

Looking through rose-tinted AR lenses: Snap’s vision for the future centers on its latest augmented reality glasses, Spectacles 5.0. While there is excitement around the AR glasses, Spiegel mentioned to The Verge that he doesn’t expect them to become a “meaningful business until the end of this decade.” Nonetheless, he expressed optimism, saying, “Unlike in digital advertising, where we were a late entrant in a market with established, scaled players, we are a leader in the market for this new type of glasses.”