It has been somewhat of a ghostly week for Snap.
On Tuesday, it lost two senior ad managers — business director Jeremy Gorman and vice president of sales Peter Naylor — who were robbed by Netflix of leading the streaming giant’s new advertising business. (Both are major figures in the advertising industry and have been instrumental in Snap’s growth over the past few years.)
On Wednesday, the company announced that it is laying off 20% of its employees — about 1,200 of its current 6,400 employees — as part of the company’s broader restructuring. Other changes include the suspension of several other projects including Pixy’s self-flying camera and newer standalone apps including social mapping app Zenly and music-focused platform Voisey. Snap will also stop producing new content for Snap Originals but will retain existing offerings and switch Minis and Games products to “maintenance mode” at a lower investment.
Despite Snap’s major restructuring, marketers say the company has an opportunity to refocus the social platform around key differentiators such as augmented reality. This appears to be part of the plan.
In a note to employees this week, Snap CEO and co-founder Evan Spiegel said the mergers are an effort to refocus on three core areas: “community growth, revenue growth, and augmented reality.” (Snap estimates that the total savings from the restructuring will be about $500 million compared to the second quarter of 2022.) As part of the changes, the company has upgraded a number of executives. Jerry Hunter, who joined the company six years ago after nearly a decade at Amazon, has been promoted from senior vice president of engineering to chief operating officer. Ronan Harris, who will lead Snap’s efforts in Europe, Middle East and Africa, will also join from Google, where he was Vice President and Managing Director for the United Kingdom and Ireland.
Spiegel writes, “I believe that upgrading Jerry will result in better execution in the short term as well as a higher speed of innovation in the long term.”
For years, Snap has pioneered the use of augmented reality lenses through internal efforts and collaborations with creators and brands. According to Stephen Moy, CEO of advertising agency Barbarian Group, the augmented reality capabilities of Snapchat are roughly similar to 1.1 from the metaverse and something brands are increasingly experiencing as they move beyond social commerce and virtual reality, Snapchat becomes more and more attractive.
“It’s kind of like a metaverse for beginners,” Moy said. “I don’t need to go to Decentraland and a lot of those experiences which are still a bit difficult.”
Several advertising executives note that Snap’s ability to rapidly experiment and roll out new products for augmented reality and other formats gives it an opportunity to play a greater role in driving content innovation. (It also gives it an edge amid the clone wars other social networks are playing.) In an interview last month on the broader social media landscape, Elle Bamford, global head of media and communications at R/GA, said Snap was smart to handle it. Innovate and diversify quickly.”
“They’ve done a lot of things to try and look at these pockets where they can provide value and stealth,” Bamford said. “That’s clever, and I certainly in no way think Snap is over, out of play or irrelevant. Their product development team is exceptional.”
Kelsey Chicking, principal analyst at Forrester, said Snap has been an industry leader with various features such as augmented reality. However, she said she has not been able to keep up with TikTok’s “addictive nature” and has not “captured the same charm”. According to a Forrester survey for 2022 Media and Marketing Benchmark, 42% of online adults in the United States between the ages of 18 and 25 said they think TikTok is an “addictive” platform, but only 21% said the same about Snapchat.
“Advertisers don’t turn to Snapchat with ‘always on’ social media budgets, like it’s Meta,” she said. “Snapchat is a great channel for seasonal or support-based activation, which makes it a great component of a media plan. The economic uncertainty that marketers are working in will make them more focused on tried and true channels that are working hard, leaving platforms like Snapchat behind.”
Despite Snap’s recent struggles, some marketers are praising the results they’ve seen on the platform. It’s still a major platform in the United States for New Balance fashion and lifestyle products, said Chris Davis, New Balance’s head of marketing, for example. He said the platform continues to outpace other social networks when it comes to return on ad spend and impressions, especially with less suppressive marketing. Last year, New Balance—which has been a pilot partner for the new technology with Snap—created an augmented reality campaign starring NBA star Kawhi Leonard for the limited-edition sneaker launch in collaboration with Jolly Rancher. The campaign reached more than 7.3 million users and sent 250,000 to the brand’s website.
“Their team is keen to incorporate us into new initiatives and technologies, as evidenced by past augmented reality activations,” Davis said. “We’ve seen an increase in brand preference in these launches as well.”
Vinnie Rinaldi, head of media, data and technology analytics at The Hershey, said that Snapchat still hits “a lot of eyeballs and time spent on the platform” – especially from eras when buying behavior changes – and that the chocolate company’s marketing on the platform would be effective. .
“I wouldn’t say Snape is doomed in any way,” Rinaldi said. “Like everyone else, advertising tech headwinds are real based on market dynamics and we’re seeing hiring freezes as well as layoffs, but a lot of these companies were overestimated based on market initially.”