Snap's revenue surges 36% as user base steadies at 186M
- Snapchat parent Snap reduced its quarterly loss as revenue surged 36% from a year earlier to $389.8 million on strong gains in digital advertising, per an announcement. Ad impressions surged 179% from a year earlier, but pricing declined 48% as the company shifted to programmatic ad insertions.
- The user base for Snapchat, which is popular with U.S. teens, held steady at 186 million in Q4 2018 after two quarters of declines from a peak of 191 million in Q1 2018. Snap's quarterly loss fell 45% to $191.7 million from $350 million a year earlier.
- Snapchat’s premium content, including Publisher Stories, Shows and a redesigned Discover section, helped to more than double ad revenue from the prior year, Snap CEO Evan Spiegel said in prepared remarks. Snapchat can reach 70% of U.S. consumers ages 13 to 34 with premium mobile video ads on a monthly basis, he said. The company is focused on rebuilding the Android version of Snapchat to improve its performance on more mobile devices.
Snap's quarterly results may indicate the company has stabilized its user base after alienating many people who didn't like an app redesign aimed at making Snapchat easier to use. The company went through a tumultuous year of shifting toward a greater dependence on programmatic advertising that led to having the lowest CPMs among social media platforms. Snap has benefited from a boom in digital advertising that led to strong Q4 gains for Google parent Alphabet (up 20% from a year earlier), Facebook (up 30%) and Amazon (up 95%).
Snap’s key strength is in reaching younger U.S. audiences, and the company boosted its average revenue per user 23% to $3.38 in Q4 from a year earlier. Over 1,400 marketers ran ads on Snapchat in 2018, according to new data from MediaRadar shared with Mobile Marketer. Most were one-off campaigns, with more than half of ad spend coming from the media, tech and retail sectors. The top 5 advertisers by spend were Comcast, Mars, AT&T, Adidas and P&G.
Snap is forecast to command about 0.7% of U.S. digital ad market this year, behind Google’s 31.3%, Facebook’s 20.5% and Amazon’s 2.8%, according to research firm eMarketer. Video-sharing platform TikTok, which has a bigger user base than Snapchat and recently has ranked higher in app downloads, may become a more serious threat with the expansion of its ad platform.
Snap's investment in original content is helping to boost engagement with Snapchat. The audience for Publisher Stories and Shows grew by 30% from a year earlier, Spiegel said. He touted the experience of NBC News, whose daily news show "Stay Tuned" reaches an entirely new audience among the two-thirds of the 25 million to 35 million Snapchatters who watch the show. NBC News' parent company invested $500 million in Snap during the company's IPO in March 2017.
"Stories are propelling advertising growth throughout the industry, and as the platform that started the Stories trend, Snap continues to see growing advertiser adoption," Aaron Goldman, CMO at 4C Insights, said in an emailed statement to Mobile Marketer. "As Snap further develops its offerings, we’re anticipating continued confidence from advertisers looking to reach its highly engaged user base."
Facebook-owned Instagram, which has copied multiple key features of Snapchat such as stories that string together several images in a single post that disappears after 24 hours, remains the biggest threat to Snap. Eighty-five percent of U.S. teens report using Instagram at least once a month, about equal to Snapchat's 84%, according to Piper Jaffray's "Taking Stock With Teens" survey.
Snap is looking at possible changes to Snapchat that would make public posts stay in the app longer or never disappear, undoing the key disappearing feature of the image-messaging app. Snapchat also is considering whether to reveal the identities of users who make those public posts. The company also needs to improve its Android app to stem losses. Snap released a new version of the app to a small group of users and plans to expand to more regions, Spiegel said.