Snapchat broke it’s four year streak of low revenue and growth… Twitter’s Q2 results are also noteworthy. If you saw a spike in their stock prices. it’s because of the forward looking results.
Twitter and Snapchat generally live in the shadows of Facebook and Google in revenue from digital advertisement. Although they still have a long way to reach Facebook’s level, the recent quarterly results suggested that they’re finally getting somewhere and doing something right.
A few years ago, there were concerns about Snap (Snapchat’s parent company) surviving on its own. It’s stock fell to $5 in 2018 when it launched on Android. The Android app didn’t work very well, and that posed a big problem because two thirds of the world back then did not have an iPhone. They redesigned the app, which was not greeted with enthusiasm by the users. Then some of the staff started quitting, including senior leaders like Imran Khan. At the same time, Instagram copied Snapchat’s “stories” feature and made it better. So their existing users also started switching. The future for Snapchat seemed truly bleak.
But their quarter two reports tell a different story. Their quarterly revenue more than doubled to $982 million (source: Snap’s quarterly report) and had 13 million active monthly users, the best user growth rate in over 4 years! The net loss improved a whopping 53% to $(152) million, the operating cash flow increased by more than $30 million and their shares hit a record high at $77.
They’d been running with huge losses for years, and were unsure of their survival. What, then, did cause this unprecedented growth?
It’s tough to point out individual reasons responsible for this since they introduced a plethora of new features in the past few months.
They expanded their “lenses” and experimented with augmented reality platforms! They introduced 3-D body mesh, advanced cloth simulation, added new visual effect editors for more realistic lenses. More than 170 million Snapchatters use Scan to identify dog breeds, solve math sums, discover recipes and much more. Expanding this seemed like a good idea and so they added more categories for Scan, including fashion and food. Connected lenses allowed Snap users in different locations to interact via AR.
Content is key. Exclusivity is attractive and creates FOMO. So they aired and renewed 8 Snap Originals in 3 months! This includes ‘Swae Meets World,’ featuring American musican Swae Lee as he gets ready to launch his solo album. Spotlight, the TikTok feature of Snap, saw an increase in the user base by 49%. The average Spotlights made more than tripled and daily time spent per user grew over 60% (quarter-over-quarter). They also introduced integration with YouTube, YouTube Music, Disney, Bumble and more.
For digital advertisement revenue, they need influencers and companies willing to pay to promote and sponsor their content. After finally realising this, they introduced public profiles for businesses where they can showcase their Lenses, Highlights, Stories and shoppable products. They tied up with companies like Salesforce and launched Creator Marketplace for easy navigation for companies, targeting the right consumers etc.
That’s a lot of new changes. But they seem to be heading in the right direction, finally. It shows Snap’s resilience in the thick of the pandemic as its economic conditions have improved.
Twitter, on the other hand, has a vast user base. They have been struggling to monetize these users. Finally, this quarter, they made significant improvements in this sphere. The revenue rose 74% year-on-year (Source: Twitter’s quarterly reports) and their advertisement revenue amounted to $1.05 billion (87% increase year-on-year). The total ad engagement also increased 32%!
Why do people use Twitter? For discussions and to keep up… That’s why they hope to benefit from sports in Q3 with upcoming and Ongoing events like Tokyo Olympics’21 and NBA. They partnered with NFL, which means you can now see all the highlights, touchdowns catches and biggest moments of the game, all on Twitter! And exclusive NFL content on Twitter Spaces.
The face that most of Twitter’s ad revenue comes from brand vs direct response ads, it will soften the blow from Apple’s iOs privacy changes since brand ads tend to rely less on tracking the user’s activity.
Facebook and Google have been around for way too long now and have enjoyed there position in the market. Even though these companies aren’t nearly as them yet, they will get there eventually. They feel alive and are growing faster than ever!
The Echo-nomist 
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