Snap targets AR to revive ad business amid share decline

As reported by Reuters, Snap Inc., the parent company of Snapchat, is set to overhaul its advertising strategy in an effort to enhance its performance in the competitive social media landscape.

According to a memo from CEO Evan Spiegel to employees on Tuesday, he acknowledged the company's challenges in keeping pace with rivals such as Meta's Instagram and ByteDance's TikTok. "Our advertising business is growing slower than our competitors," Spiegel stated.

To address these challenges, the company plans to diversify its advertising offerings, with a focus on augmented reality (AR) technology. The move comes as Snap faces a difficult financial outlook, having forecast disappointing results for the current quarter due to a decrease in advertising spending.

According to LSEG data, Snap is expected to generate $5.34 billion in revenue for the fiscal year 2024. However, the company’s share price has dropped by about 48% since the start of the year.

In response to these pressures, the company is revamping its market approach by introducing new ad placements powered by machine learning and automation. Additionally, it is doubling down on its investment in AR and smart glasses technology, following similar initiatives 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 explained in the memo.

This strategic shift comes after Snap's June launch of generative AI tools, which enable users to apply more realistic effects when using their phone cameras.