Snap stock plunged 30% on Tuesday after reporting fourth-quarter 2023 results that missed analysts’ expectations. On earnings, CEO Evan Spiegel said the company is taking a few steps this year to fuel growth. These include unifying the Stories and Spotlight experience, improving ad interactions across platforms, and increasing user engagement and growth in North America and Europe.
The social network launched its TikTok rival Spotlight three years ago and has seen promising results. Spotlight’s total watch time increased 175% year-over-year and average monthly active users increased 35% year-over-year, according to the company’s Q4 2023 earnings announcement.
Spiegel said the company wants to leverage things like ranking engines and recommendation engines from Spotlight and port to Stories for better engagement. The company wants to start by merging the interface and navigation gap between these two divisions, but knows that changes to core product offerings like these can backfire.
“Anytime you’re asking people to change their behavior, that can be difficult. That’s why we really try to pay attention to it. I think one of the most frustrating things from a user experience perspective is that the user interface and navigation for Spotlight is different than the user interface and navigation for Stories,” Spiegel said on a call with analysts.
“The initial steps here are really trying to unify the user interface and then unify the navigation and make sure there’s not, you know, negative knock-on effects to different parts of our business.”
It’s all about money
Snap’s efforts to merge the Stories and Spotlight experience also have to do with the social network trying to better incentivize advertisers. During the earnings call, Spiegel boasted that Spotlight has about 99% brand-safe content, according to a third-party audit estimate.
“I think one of the really unique things about Snapchat is that advertisers can get a brand-safe experience without paying a premium for it like they have to on other platforms to avoid harmful content,” he noted.
“I think we’re going to be able to continue to extend those benefits to advertisers in that unified experience, and our very high levels of brand safety, I think, is a real differentiator for us.”
The company also said it plans to develop insights from its use of AI into more “relevant and engaging advertising” for users.
In May 2023, Snap announced new ad products for both Stories and Spotlight along with sponsored link functionality for My AI.
In addition, Spiegel said the company has focused on developing its Android app in recent years to gain growth in emerging markets. However, it is now poised to ramp up development on the iOS front to attract more engagement from regions with more “revenue potential” such as North America and Europe.
The company has already started taking cost-cutting measures. Earlier this month, the company laid off 10% of its workforce (affecting more than 500 people) to cut “a number of layers of management”.
“To make our business the best it can be to deliver on our highest priorities and to ensure we have the ability to invest incrementally to support our growth over time, we’ve made the difficult decision to restructure our team” , the company said in SEC filing.
