Snapchat’s entertainment business, whose core is a short-form series, is the area where the company faces the biggest battle to win customer attention, said CEO Evan Spiegel.
Speaking at the Goldman Sachs Communicopia conference on Wednesday, Spiegel was asked to identify snap contestants. He replied that at a higher level, Snapchat’s entertainment business competes with “everything in the shadow of entertainment”, including games. “The competition there will be quite intense,” he said.
With Snapchat’s video business, “for many years we had to convince people to cut videos vertically,” Spiegel said, and it’s much less so today.
Other parts of Snap’s business have less time to wait against other apps, such as connecting with friends or finding new products, than improving Snapchat’s utility. Regarding international expansion, the agency has focused on making Snapchat culturally relevant and localized in individual countries, including Europe and Japan, Spiegel said.
Snap is generating a record quarterly revenue in the second quarter, with sales more than doubling to ২ 982 million. During this period, Snapchat had 13 million daily users, the best user growth rate in four years, for an average of 293 million DAUs worldwide. In the third quarter of 2021, Snap expects to reach 301 million DAUs worldwide, an increase of 21% year-over-year.
Spiegel said Snapchat Spotlight, the user-contributing video section of the app launched about a year ago, “is the first time any video has been able to go viral on Snapchat.” At one point, he and other company executives were “terrified” of the harmful content quickly reaching a large audience. Using Snap AI and Human Reviewer has greatly reduced this risk by moderating the spotlight section, he said.
Originally, Snapchat said it paid Spotlight makers more than 1 1 million a day based on their involvement with the content. Since June, the company has apparently reduced the amount payable overall, reporting that some users have abandoned the spotlight.
According to Spiegel, one of the issues with Spotlight was that there was a lot of copycat content: users would see the winning content and “create the same thing.” Even after changing the terms of the program to attract a greater variety of video content, Snap has seen record-high deposits in the spotlight, he added. The company is now focusing on the development of technology for “understanding content,” which makes a video interesting and determining whether Snapchat will be able to recommend it to users, Spiegel said.
Spiegel said Snap is also bullish when it comes to using AR lenses in the Snapchat app to facilitate shopping, for example, allowing users to see themselves wearing different outfits.
“We felt that to improve the shopping experience, it was a huge opportunity to do something that was much more immersive and fun,” he said. About 30% of Snapchat users’ discretionary income is spent on fashion accessories, according to Spiegel.
Covid Lockdown was “challenging” from an engagement standpoint for Snap, Spiegel admits. The CEO said, “The good thing is that with the lockdown coming down … we’re definitely seeing improvements to the matrix that’s important to us, such as story posting and the use of maps.”
The Snapchat app is turning 10 this week, Spiegel noted. “When we first started our business, people were just using their cameras to capture important moments,” he said. “We have identified this opportunity to use the camera for communication.”