Snap Revenue Down 7% As Ad Earnings Slump

London, UK - July 30, 2018: The buttons of Snapchat, Facebook, WhatsApp, Twitter and other apps on the screen of an iPhone.

Snap’s revenue has taken a 7 per cent hit, dropping from just over US$1 billion (AU$1.5 billion) to US$988 million (AU$1.48 billion) and a slump in the company’s advertising earnings are to blame.

This loss of revenue was despite Snapchat’s adding an extra 51 million daily active users, hitting a total of 383 million in the first three months of this year.

“The macroeconomic environment continues to be a headwind to revenue growth, and we are using this opportunity to make significant improvements to our advertising platform, including transitioning to a new ad format that is consistent across the content Snapchatters view on our platform and optimising our webview experience to improve in-session conversions,” said the company in a letter to investors.

“As expected, demand in Q1 was disrupted by the changes we made to our ad platform to drive more click-through conversions, and as advertisers adapt their measurement solutions to these new objectives. While these changes are disruptive in the short term, we are optimistic that our ad platform improvements are laying the foundation for future growth. We believe that delivering stronger return on ad spend (ROAS) and performance for our advertisers will enable us to increase our share of wallet over time in this highly competitive environment.”

Snap has been having a tough time of it recently with the company’s share price down a whopping 63 per cent year-on-year.

However, the company has persisted in its efforts to improve its ads offering and has even diversified with its Snapchat+ subscription service, offering users a look at in-development features in return for a monthly fee. The service now boasts three million paying users.

“We simplified Ads Manager create workflows, improved ad management experiences on mobile, redesigned the creative library and simplified our payments onboarding experiences,” said the company in its earnings release.

“We transitioned to a new ad format for Snapchatters that aligned ad design with content design, which is an important input toward a consistent and unified content and advertising interaction experience across Spotlight and Stories.”

Partners have reportedly been seeing results with apparel company Courir reporting a 24 per cent decrease in cost per purchase within Ads Manager and a 43 per cent increase in ROAS.

Sunglasses brand Goodr also used Snap’s AR Try-On tech and saw an 81 per cent uplift in add-to-cart and a 67 per cent uplift in conversion for mobile device users, leading to a 59 per cent increase in revenue per shopper.

While those successes are notable for the brands, they did not stop Snap from reporting an operating loss of US$365 million (AU$550 million).

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