• by Colin Kirkland , September 4, 2024

In a letter addressed to Snap's ad team, CEO Evan Spiegel lays out the future of the social media platform's growing ad business, including new sponsored ad placements in the app’s chat inbox -- a feature that Spiegel believes will allow advertisers engage prospective customers all the way down the funnel in a single advertising unit.

Leveraging the same full-screen vertical video Snap Ad format currently used across the platform, Sponsored Snaps will appear in the chat inbox as a new Snap without a push notification, giving users the option to open the message or not.

Spiegel says the ad unit is designed to help advertisers “raise awareness with broad reach in the chat inbox,” while also driving conversion with an in-message call-to-action.

“As we continue to evolve Sponsored Snaps, we are excited to enable more messaging features powered by generative AI and integrated into advertiser CRMs to help our partners communicate with their customers at scale,” Spiegel adds, highlighting that users' conversations with friends will remain private and will not be used for advertising purposes.

When the product eventually launches to the public, it will mark the first attempt Snap has made to integrate promotional materials in the app's inbox feature -- falling in line with similar strategies enacted by competing social platforms like LinkedIn i.e. the sponsored InMail feature.

Overall, Spiegel says the company's main focus in evolving its ad business relies on growing the number of advertisers focused on lower-funnel goals.

“Over the years, we have found that lower funnel revenue generated by small- and medium-sized customers is more predictable and stable than upper funnel revenue,” the CEO says. “It also represents a larger long term opportunity for revenue growth.”

According to Spiegel, lower-funnel revenue is “stickier” in that it is closely tied to advertisers’ key business objectives and positive returns on ad spend. Spiegel believes it is “diversified across a larger number of advertisers and sectors.”

In addition to Sponsored Snaps, Snap is also adding Promoted Places, a feature that invites businesses to highlight their stores on the Snap Map, which is designed to help them reach customers who are exploring places nearby while measuring the visitation lift using the app’s measurement tools.

As the company continues to focus on expanding its ad business, it will also combine its various ad tools into “a single, self-serve tool” designed to to help convert insights into actionable recommendations that will help advertisers better understand how their creative is working to convert users on the platform.

Since working to redesign its ad business two years ago, Snap has focused on attracting more SMBs to its platform with the launch of its Conversions API (CAPI), attracting 85% more SMB advertisers year-over-year in the first quarter.