Snapchat has released its latest performance update, showing solid increases in both usage and revenue during the first quarter of 2021.
The numbers will certainly raise some eyebrows and likely get more social media marketers to consider their options on the app.
First, in usage: 280 million people use Snapchat every day, a 22% increase in performance from year to year, and the largest increase in the application in its year-on-year use in more than 3 years.
As you can see here, while Snapchat usage increased across all regions, the app again experienced its strongest growth in the ‘Rest of the World’ segment, largely due to the company’s continued investment in more localized content. and improved language support options.
Snap has seen particularly strong growth in India lately, with its Android update, released in 2019, playing a key role in driving uptake from Indian users (Android is by far the most popular operating system in the Indian market). ). In fact, Snapchat reports that, for the first time in the first quarter, the majority of its DAUs were on the Android version of the app. That’s a big change for a company that has long resisted Android and focused more on aligning itself with the technical superiority of iOS devices.
Snapchat also launched its first Snap Original for the Indian market in the quarter, with a local version of ‘Phone Swap’.
Snapchat now has more than 60 million users in the Indian market, approaching its most important sectors of use.
Snap original content continues to play a key role in attracting new users more broadly and increasing engagement in the app, with more than 20 million people watching the new series “Ryan Doesn’t Know” starring by Hollywood star Ryan Reynolds.
Snapchat is also experiencing increased engagement with its AR tools, with the number of Snapchatters interacting with its AR lenses growing daily by more than 40% year over year. That seems to become an increasingly important focus for the app, with reports that Snap is also working on a new, fully AR-enabled version of its Spectacles device.
Snap has also highlighted the growth of its TikTok clone ‘Spotlight’, which, in addition to being a source for short video clips, also offers cash incentives (up to $ 1 million per day) for the best and hottest Spotlight shorts.
Several creators have made a lot of money from the option, and that has probably helped improve the general acceptance of the option.
“In March, more than 125 million Snapchat users used Spotlight, our latest platform displaying the most entertaining Snaps from our community. We also launched Spotlight in three new countries: India, Mexico and Brazil, and we published it in a total of 14 countries.
That’s significant within the scope of Snapchat’s general usage growth figures, but the looming question is how sustainable that process will be. Can Snap just keep paying millions of dollars to keep good content and keep users coming back to Spotlight for more?
There are definitely some concerns within that, as reflected in Snap’s ‘Cost of Income’ graph.
As you can see, the company’s ‘Developer and Content Partner Costs’ have seen a huge increase in the last two quarters, more than doubling in Q3 2020. That figure incorporates its Spotlight payments ($ 90 million ), as well as its ongoing AR development, and this will be a key item to monitor going forward, as to how Snap can maintain its momentum in line with costs.
But at the same time, income is also increasing. Snapchat posted a 66% year-on-year increase in revenue for the quarter, reaching $ 770 million.
Therefore, Snap’s cost of revenue may have increased by $ 158 million year over year, but its total revenue income increased by $ 308 million in the same period. Maybe the math will work and Snap can sustain those Spotlight costs, as its usage benefits would help drive more interest from advertisers.
In its accompanying notes, Snap has also highlighted its growing e-commerce opportunities, with increased investment in augmented reality testing tools, digital apparel for avatars, and advanced opportunities through its evolving full-body scanning augmented reality technology. .
Snap also says that more than 75 million Snapchat users viewed beauty-related content each month on Discover in the first quarter, which could point to more marketing opportunities on the platform that play to its advanced AR features. Snap launched a new augmented reality trial experience with Estee Lauder earlier in the week.
As Snap CEO Evan Spiegel explained:
“We believe that our leadership in both AR capabilities and user engagement positions us well to expand augmented reality to new use cases and behaviors. For example, as the shift to online shopping continues to accelerate, we believe that there is a great untapped opportunity for AR – product innovation driven by e-commerce – and that our young audience will continue to be the early adopters of these new technologies. and shopping experiences «.
Spiegel says Snap is focused on providing more clothing and accessories tools and helping shoppers find the right size and fit to reduce friction in online shopping experiences. Snap acquired FitAnalytics last month, a company that provides tools that help brands facilitate more accurate product matches through AR.
Another area of constant concern for Snap is the impact of Apple’s IDFA update, which we now know will roll out next week. Reports have suggested that both Snapchat and Facebook will be hit the hardest by the change, but Snap’s chief commercial officer Jeremi Gorman says both Snap and its advertising partners are prepared.
“We support Apple’s approach because we have always believed that advertising should respect customer privacy. The fact that these changes are coming later than we anticipated has provided additional time to adopt Apple’s SKAdNetwork and begin implementing and testing with our partners. Advertisers representing the majority of our direct response advertising revenue and have successfully implemented SKAdnetwork for their Snap ‘campaigns.
Gorman further notes that Snap is designing a variety of privacy-focused solutions to ensure that they can continue to provide a privacy-first experience and best-in-class offers for their advertising partners.
Overall this is a positive report for Snap, which has now established its niche and presence in the broader sphere of social media. At one point, it looked like Facebook would either swallow it or kick it out, but Snap has stood its ground and stayed in tune with its user community, allowing it to refine its offerings and maximize its potential as a business. connective tool.
And it is definitely now a worthy consideration for marketers. For comparison, Snapchat, now with 280 million users, has more daily assets than Twitter (192 million mDAU) and Reddit (52 million).
It’s worth considering Snap’s audience and how it might fit into your strategy.
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