LOS ANGELES, CA: Following Snap’s difficult transition from traditional ad sales to programmatic self-service, the Snapchat owner managed to defy analysts and show significant progress.
After a number of difficult earnings calls in which company executives attempted to shrug off astronomical losses and sluggish user growth, Snap appears to have completed the painful shift in its advertising business.
Now, the company has said it is selling more than 90% of its ads through the programmatic platform. “Our business really came together towards the end of last year,” Evan Spiegel, Snap CEO told investors.
Daily active users grew 18% year on year, adding 8.9m to reach a total of 187m. The company managed also to outdo analysts’ predictions of Q4 performance, raking in $285.7m, compared to a $254m forecast.
This amounts to a year on year revenue growth of 74% in the fourth quarter, though the company warned that this would probably slow again in Q1 after big holiday adspend.
The company continued to make a loss, though this figure shrank by a fifth. In Q4, it still cost $646 million to create $286 million in revenue, as Quartz put it.
As the cost of ads on Google and Facebook, typically a source of Snap’s woes, increases, the more affordable Snapchat aims to find a far broader pool of small business clients. As the transition to self-service raged in Q3, however, Snap saw the number of advertisers on the platform double.
“There is a lot of work ahead as we optimise the updated application, but our early observations support the thesis behind the new architecture and the many growth opportunities that it provides,” Spiegel said of the redesigned app, which has rolled out to around a fifth of its total audience, and divides messages from friends and publisher content.
Unlike Facebook, however, Snap has recently gone on a charm offensive toward publishers. An email sent to publisher partners by Mike Su, Snapchat’s new platform content head, explained that Snap would become a more proactive partner.
“This means finding more ways we can work together, more ways to support your business goals, and being more proactive with sharing insights and best practices to help your teams improve content quality and reach more of your audience”, Su wrote.
As a result of the Q4 results, Snap’s stocks finally grew above the $17 IPO price.
Sourced from Seeking Alpha, Financial Times, WARC, Wall Street Journal, Quartz, Digiday; additional content by WARC staff