Snap to revamp ad strategy, focus on augmented reality

Snap prioritises ad growth: Snap is set to prioritise the expansion and diversification of its underperforming advertising business, with a particular emphasis on augmented reality, as CEO Evan Spiegel conveyed to employees in a note on Tuesday.

This shift comes at a challenging time for Snapchat's parent company, which is battling stiff competition from major social media giants like Instagram's parent company Meta Platforms and TikTok owner ByteDance for advertising revenue.

"You might wonder why, despite the significant progress we've made over the past year, our stock performance has lagged behind the broader market. The reason is straightforward: our advertising business is growing slower than our competitors," Spiegel stated in the note.

Earlier in August, Snap issued a weak forecast for the current quarter, attributing it to a drop in advertising spend. The company is now expected to report a fiscal 2024 revenue of $5.34 billion, according to LSEG data.

Stock plunge spurs strategy revamp

Snap's stock has plummeted by approximately 48 per cent this year.

To address these challenges, the company plans to revamp its market strategy by introducing new ad placements powered by machine learning and automation.

Additionally, Snap is advancing its development of augmented reality and smart glasses, akin to the efforts of its competitor, Meta.

"We are investing in the creation of augmented reality glasses that will enable people to interact with computing, the world, and each other in entirely new ways," the note mentioned.

In June, Snap launched generative AI tools that allow users to apply more realistic effects when using their phone cameras to film themselves.

(With Reuters Inputs)