Snap, the popular social media app for photos and videos, witnessed sharply higher advertising revenues -- soaring 52% to $678.7 million in the third quarter -- surprising many analysts.
“Snap, as the most efficient advertising vehicle for marketers looking to target 13-to-34-year-olds, is starting to see major brands embrace the platform for broad reach,” writes Michael Nathanson, senior research analyst at MoffettNathanson Research.
This comes, he says, amidst general linear TV and other entertainment seeing continuing declines, as well as some troubling issues among competitive platforms such as TikTok.
Total daily time spent by Snap users watching the company's shows -- TV programs on mobile --- rose by more than 50%, according to the company. For example, ESPN's SportsCenter viewership rose 80% between July and September.
Net losses for Snap were trimmed by 13% to $198.9 million, from $228.7 million.
Snap's diverse array of advertising products -- including video and others -- continue to see gains, especially with cost per thousand impressions (CPMs), writes Mark Shmulik, media analyst at Bernstein Research.
“CPMs were up for the first time (+20%) as advertiser demand outpaced new ad inventory, yet ROAS [return on advertising spend] remained steady, suggesting that advertisers can meet their targets with fewer ad impressions.” Shmulik says major growth in video advertising and related products -- such as Snap’s augmented reality 'try-on' -- where consumers can sample clothes -- helped video commercial ad revenues rise by two times over previous levels.
Snap’s stock price was up 18% on Tuesday -- the day of its third-quarter financial release -- and another 10% in early-morning Wednesday trading to $38.65.