Okay, we're having look at Snapchat and Snapchats parent company sashing stuff, scaling back investments in struggling businesses, all in an attempt to rain in costs following a slowdown and add revenue growth. Let's get to the details on this and other similar companies. Alex Sabrinka Social Media reported joins is, Alex, what do you make of this? And you know how struggling is this business? And is the business model here
wearing thin? Yeah? So I think that this is a pretty big deal for this company and it's in a really bad year currently. The shares are down to the tune of seventy six percent for the year, so clearly there are not a lot of votes of confidence that they're after the right thing right now. So it's all told in the news that came out Today's as you mentioned, now is cutting its workforce. It's also killing a lot of projects that are kind of ancillary to its core
Snapchat app. Um, there's a flying drone that takes pictures, Um, it's snap original. These shows in series that produced, they're basically culling anything and everything that is not in service of expanding its ad sales or bringing on kind of new, meaningful um revenue streams for the business. So did this company become overly ambitious as a result of maybe a spike in business during the pandemic. Did they become a
little self deluded. I don't know if self deluded. I think it's part of the Snap DNA to kind of create quirky new products and really see what works. The problem with that is, you know, when investors expect those products to turn into money winning opportunities. Um, if you do see sales kind of take a huge decline like
they did this year, that becomes a problem. Snap is in this interesting place where you know, they're competing for dollar share from marketers budgets, against meta's, Facebook and Instagram, against Google and YouTube, against all of these kind of really big um competitors where advertise users can put their dollars and have a really clear picture on the return on investment of those dollars. Snaps add products are a bit different, Like they have some videos and ads that
they can put in in between publicly posted content. You also can as a brand kind of build a bespoke lens like a filter to put in the app. All that's to say it requires a lot of work. Um, and these are kind of brand type narrative activations that
a lot of marketers might be killing right now. So, Um, you know, back to your question, like is a delusion, I don't know, Like they think of themselves as a is a innovative product company, but it's clear that the company now is saying that they need to focus on where they really, you know, make their bread and butter in terms of the business. Alex. Also, I mean, we've got changes to Apple's operating system and that's making it difficult for snaps app and indeed also at the same
time Meta and companies either to track user activity. Yeah. Absolutely, So that change that happened in the iOS fourteen update more about a year into that here, And what that did is is, to your point, make it much more difficult for social media platforms to basically track the effectiveness of ads on the platform. Um. Snap Also, you know their head of their chief business officers leaving for Netflix.
She's the one who oversaw ad sales. Her departments are actually getting moved over to a new chief operating officer who comes from the engineering department. It seems like them kind of marrying engineering with the ad sales could be a way to get them a little bit closer to some workarounds that they're having to find because of the changes to Apple's policies that made it much more difficult for them to um, you know, gauge the metrics of
success for the ads that marketers are paying for. So are they dialing back on ambition to create their own content, whether it's some kind of show or series. Are are they becoming less aggressive in that front? Yeah? Absolutely so. Snap Originals is something that was on the chopping block. This was something that's been around for a long time since the part of the Snapchat app called the Discover Explore page was around. These are the shows in series
that Snap produces. It looks like advertisers and brands are able to still post those these kind of you know, longish form for social media videos, but their own content. That is one of the things that has fallen below the line and probably where some of the workforce that's
being cut is coming from. Now, let's not forget also Alex here that we've got so many entrance now, TikTok, Netflix, Walt Disney all coming up with ad supported streaming, uh streaming a video now that's just really taking out more and more of the pie. It's it's the pies remain the same. There's more people competing for their share, absolutely, and Snap is getting a smaller slice. You know, you mentioned TikTok I cover their US operations for us here
at Bloomberg. TikTok goes after kind of the same customer that snapped US. Snap has historically really one this younger teen and twenty something customer and and really kind of UM at least owned the reputation for that market here in the US. In particular, TikTok swept in with a really kind of sticky, engaging app and frankly with a lot of UM advertising tools and ad slots that are
more valuable to some of these advertisers. So, whether it's the battle for young users or the battle for UM, the folks who are paying for the attention of young users, UM, they definitely have a big, big, a lot of competition, particularly UM from TikTok with on that pie, which is you know, as we said, shrinking in these kind of uncertain economic times, Alex very quickly, does the board still have confidence do you think? In CEO Evan Spiegel very
quickly twenty seconds or so. Evan and his founder have ninety nine or so percent control, so if they have confidence in him, it seems like it, but they have a majority of the voting control of that company. All right, I'll let you decide, all right, Thanks, good stuff. Alex Barenka is Bloomberg social media reporter, joining us here on Dave Breakcasia