Jyoti Rambhai
Jan 14, 2024

Snapchat+’s AI features see subscribers skyrocket but advertisers remain cautious

With seven million paying users, are brands being too quick to ‘overlook Snapchat’s strengths’ when it comes to advertising?

Photo: Campaign US.
Photo: Campaign US.

Snapchat+ users reached seven million users last month (December 2023) as subscribers flocked to use the platforms slew of AI features.

The $3.99/£3.99 per month premium subscription tier was first launched by Snapchat Inc in 2022 and by April 2023, it had more than three million users.

It now overshadows its social media competitors: Both Instagram and X, formerly Twitter, have struggled to surpass one million subscribers. That’s partly because, Snapchat+ is not simply a status verification service such as the blue ticks on X, it offers users numerous generative AI tools.

These include an image generator, similar to Dall-E, an image expander, a GPT-4 powered chatbox called My AI, and a so-called ‘dreams’ tool, which uses selfies to create images of users in a different setting or background.

According to The Wrap, 20 billion messages have been sent through the My AI chatbox, including the limited version, which is now free to all users.

The success of Snapchat+ is likely to be a welcome new revenue stream for the platform, after it struggled to maximise the value of its ad space in 2023, with Bloomberg estimating that it could bring in $330 million in revenue over this year.

The news comes as WARC’s latest report, The Voice of Marketer 2024, found that Snapchat was one of two brands to lose popularity among advertisers, with a net 4% planning to decrease spend.

The survey, which polled 1,400 marketers across the world, revealed that the majority are planning to increase their investment in social media, online video and mobile. YouTube and TikTok were among the top digital channels marketers indicated they would be increasing spend.

Alex Brownsell, head of content, WARC Media, told Performance Marketing World: “Snap endured a tough time in 2023. Ad revenues dipped as marketers favoured investment with platforms boasting larger audiences and proximity to the point of purchase. Among global marketers surveyed by WARC last year, only 21% of respondents said they plan to increase spend with Snapchat in 2024.

“The platform clearly suffers with perception issues among advertisers. Yet, as news that Snapchat+ now has seven million paying users shows, brands are maybe too quick to overlook its strengths. Snapchat has always offered a young and engaged audience, and its innovation with generative AI features is helping to deepen that relationship with Gen Z users.

“The danger for brands, of course, is subscription plans are often designed to help users avoid ads —and Snap is currently testing ad free plans. However, seven million remains a tiny fraction of Snapchat’s total 750 million global user base, so there are still plenty of opportunities for brands to reach its audience.

“And the latest forecasts from WARC Media suggest many brands plan to do precisely that, with Snapchat’s ad revenue forecast to increase 13.8% year-on-year in 2024.”

This article first appeared on Campaign sister title Performance Marketing World

 

Source:
Campaign US

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