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Can Snapchat’s AI and AR ad formats revitalize revenue?

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By Chris Sutcliffe | Senior reporter

May 2, 2023 | 6 min read

Snap has detailed a series of tech innovations in its ad products at a time when it really needs to win back brands.

An image of the Snap First Story ad format

Snap’s new advertising options include the ability to reserve the first slot in users’ Friends Stories feed / Snap Inc

At the IAB NewFronts today, Snap shared new opportunities to reserve the first video ads users see between Friends Stories, as well as a new rally on its AI capabilities to stand out among competitors.

It comes after a tricky quarterly report that saw its revenue down 7% year on year, partly due to diminished demand from cautious investors and as a fallout from Apple’s restrictive ATT policy.

The priority for marketers in the first half of the year has been on ROI, and Snap specifically cited ROI statistics in the announcement. Speaking of its newly announced creator partnership ‘Snap Star Collab Studio’, it reported that makeup brand NYX Professional Makeup saw increased ROI by working with the tool: “The combination of Snap Stars and High-Impact Takeovers yielded more than 13 times return-on-ad-spend norm and over 90% of the incremental sales came from new buyers.”

A Snap spokesperson said: “This is only the beginning of deeper investment in helping facilitate brands and creator connections. Over the course of this year, we plan to roll out additional tools that will improve the ways brands and creators collaborate on Snapchat, including an expanded API and greater fluidity for paid amplification.”

To further that end, Snapchat is rolling out ads in Spotlight for all advertisers globally to speak to the 350 million users who watch Spotlight content every month. In Q1, the total time spent watching Spotlight content grew over 170% year-over-year.

That is in addition to the newly-announced advertiser takeover offering, which allows them to reserve the first ad in the Friend Stories feed, which has a potential reach of 50 million users per day. That ad could be the first six-second non-skip commercial or the first sponsored AR Lens that a user is presented with per day.

The social company noted that early partners running First Story ads include Louis Vuitton, Warner Brothers, and more. Warner Bros in particular was cited as the first global takeover for its upcoming feature The Flash, based on the DC Comics character.

AI and sports partnerships

Other key features the company seeks to highlight as points of differentiation in the market are its AI and partnership features.

The Drum previously reported that Snapchat was investing more in its Ares AR studio and its My AI capabilities, which are being rolled out globally. Now, the app is integrating more Snapchat features directly into the My AI experience, as it can now suggest relevant AR Lenses in addition to recommending Places from the Snap Map.

Its president of Americas Rob Wilk, in the Newfronts announcements, stated: “Snapchat is all about real relationships, and where over 750 million people come every month to build connections and have fun with friends, families, and their favorite creators. We’re thrilled to share at NewFronts how those real relationships drive real influence for brands as we announce new innovations and features across Stories, Spotlight, Creators, My AI and more.”

Beyond its owned and operated features, Snap also announced a number of content partnerships, a stark contrast to Twitter, which has been retreating from partnerships since its acquisition by Elon Musk.

In addition to existing partnerships, it reported that NBCUniversal will “bring custom content to Snapchat from the Paris 2024 Olympic and Paralympic Games”. Additionally, it highlights the partnership with the Women’s World Cup as an example of its further investment into the content partnership space.

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