Snap Inc. SNAP has recently introduced a game-changing augmented reality (AR) advertising feature known as Sponsored AR Filters on Snapchat, revolutionizing the way brands connect with the platform’s users. This innovative ad placement opens up new avenues for brands, moving beyond the pre-capture Lens Carousel.
Picture this: Snapchatters capture their content using the Snapchat Camera and then seamlessly transition to the post-capture Filter Carousel, where Sponsored AR Filters make their grand entrance. With a staggering five billion Snaps created daily, brands now possess the golden ticket to engage in shareable moments and completely submerge themselves in the Snapchat Camera experience from initiation to conclusion.
Sponsored AR Filters empower brands to embed themselves organically into major cultural events and day-to-day occurrences, ensuring widespread visibility and relevance. Advertisers can now expedite filter production via user-friendly templates that facilitate the quick upload of existing assets to create filters promptly. These templates range from AR face filters, location-based overlays, countdown timers to quiz generators, and more.
By merging Sponsored AR Filters with pre-capture Sponsored Lenses, brands can guarantee peak visibility and resonance throughout the entire Snapchat Camera journey, thereby amplifying brand recognition and interaction. Moreover, the inclusion of calls to action empowers advertisers to capture crucial mid-funnel signals, guiding users towards specific conversion actions and igniting measurable campaign outcomes.
One remarkable aspect of this innovative feature is that advertisers can generate Sponsored AR Filters effortlessly in under 10 minutes using Lens Web Builder, a user-friendly DIY tool for Filter and Lens creation. This democratizes participation for brands of all sizes, eliminating the need for costly traditional production and storyboarding procedures.
To kickstart their journey with Sponsored AR Filters, advertisers have two main avenues at their disposal. They can either design AR Filters using Lens Web Builder through a straightforward process of uploading creatives, saving them to their Lens Folder, and publishing the AR Filter. Alternatively, advertisers can opt for creating Sponsored AR Filter campaigns via Ads Manager by leveraging the Advance Create feature, selecting camera and AR Filter placements, and configuring their campaign components for a seamless launch on Snapchat’s platform.
Snap’s Strategic Response to Diminishing Ad Revenues
The evolving advertising landscape has posed challenges for Snap Inc., leading to a decline in ad revenues as marketing partners across various industries scale back their budgets amid prevailing operational headwinds, inflationary pressures, and escalating capital costs. Within high-growth sectors, businesses are reevaluating their investment strategies due to rising capital expenses, resulting in reduced advertising spending. This downtrend in price-per-ad impression is anticipated to impact SNAP’s advertising revenues in the short run.
In the fourth quarter of 2023, Snap’s brand-focused advertising segment experienced a 3% decline year over year, while the direct-response advertising arm witnessed a 3% year-over-year growth.
As of the fourth quarter of 2023, Snapchat boasted over 800 million monthly active users. Snap’s fourth-quarter revenue amounted to $1.36 billion, marking a 5% increase compared to the previous year. The company’s total revenues for 2023 maintained stability at $4.6 billion year over year.
Collaborating with Microsoft MSFT Advertising, Snap has integrated Sponsored Links within My AI to enhance user engagement. This partnership leverages Microsoft Advertising’s Ads for Chat API to seamlessly deliver relevant links during conversations, thereby enabling partners to reach Snapchatters when they exhibit potential interest in their offerings.
Moreover, Snapchat has introduced a new feature allowing developers to create filters with ChatGPT, enhancing the user experience. The latest beta version of Lens Studio for developers includes a 3D face mask generator for crafting generative AI face lenses. Noteworthy developer tools encompass the capability for multiple collaborators to work on projects simultaneously.
Despite facing stiff competition from platforms like TikTok and Meta Platforms META Instagram, Snap, alongside other industry players like Alphabet GOOGL, has grappled with declining ad revenues resulting from shifts in Apple’s app privacy policies. In a bid to secure a share of TV ad expenditure, Alphabet authorized third-party tagging of YouTube videos by Nielsen and comScore to assess the efficacy of ads on the platform vis-a-vis television placements. Meanwhile, META is intensifying efforts to develop generative AI functionalities to counterbalance the dip in ad revenues.
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