Snap Debuts Sponsored AR Lenses, User Growth Is Slowing

The growth of Snapchat’s audience, now at about 166 million daily users, appears to be slowing, and analysts and stockholders have taken note. On its May 10 quarterly report, the first since its March IPO, chief executive Evan Spiegel offered up the idea that his company’s AR Lenses present users with a creative tool they can’t find elsewhere, even though the Lenses have now been copied by Facebook. A new report shows that Snap’s trouble drawing in new users got serious at the start of Q2, even as rival Instagram pulls ahead.

According to Bloomberg, Snapchat began introducing promotional Lenses with corporate logos on May 15, “as well as silly tacos, on buildings, horizon lines, and other elements of a user’s photos and videos, not just faces.” The company is also creating Lens ads for smaller audiences.


A campaign like a recent one for Taco Bell “typically costs … $300,000 to $700,000,” whereas a national ad could cost 30 percent more — equal to one-fifth the price of a Super Bowl ad. Snap has run recent promotions for teen romance movie “Everything,” using “new geographic filters to add the names of local high schools.”

Snap reports that one-third of Snapchat users “play with Lenses and geofilters daily.” Warner Bros. president for worldwide marketing Blair Rich said, “Everyone who works within this space knows that AR is a key component of the future.” Creating these campaigns, said Pepsi marketing executive Salvador Padron, is “an involved months-long process,” but “it’s worth doing something interactive to reach 18- to 24-year-olds.”

These Lenses may be adding to Snap’s bottom line now, but it’s unknown whether the advertiser will see the campaigns reflected in its bottom line. “Everyone wants to try the new thing,” said mobile-ad creator Kargo chief executive Harry Kargman. “If it doesn’t perform, all of that curiosity will dissipate.”

VentureBeat reports that, even as downloads of Snapchat in April fell about 16 percent, per Sensor Tower’s Store Intelligence data, Instagram increased 19 percent in the same period. In terms of download numbers, Snapchat had 21.1 million in April, compared to 25.2 in April 2016. Instagram had 31 million in April, up from 26.1 million, making “what had been an approximately 1 million install gap for Instagram last year [grow] to about 10 million.”

The trajectory continued in the first 10 days of May, says Sensor Tower, with Snapchat downloads falling 28 percent compared to the same period last year, and Instagram up 17 percent for the same period. The downward trend comes as the company just reported revenue “well below analysts’ expectations.” In regulatory filings, Snap “notes that the inability to grow new daily active users is one of its major risk factors.”

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