{"id":63017,"date":"2025-08-06T16:44:09","date_gmt":"2025-08-06T16:44:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/63017\/"},"modified":"2025-08-06T16:44:09","modified_gmt":"2025-08-06T16:44:09","slug":"snap-focuses-on-ai-as-advertising-revenue-slows","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/63017\/","title":{"rendered":"Snap Focuses on AI as Advertising Revenue Slows"},"content":{"rendered":"

Snap<\/a>\u00a0says changing consumer behavior and tariff-related pressures are hindering advertising demand.<\/p>\n

The social media company released\u00a0earnings<\/a>\u00a0Tuesday (Aug. 5) revenues of $1.34 billion, up 9% year over year, while advertising growth slowed to just 4%.<\/p>\n

CEO\u00a0Evan Spiegel<\/a>\u00a0acknowledged that multiple headwinds, including global economic factors, hurt the company\u2019s performance.<\/p>\n

\u201cThere are a number of factors that impacted the quarter,\u201d Spiegel said on the company\u2019s earnings call, pointing to \u201cmacro challenges\u201d and platform changes that drove down auction prices for some ad campaigns.<\/p>\n

Snap\u2019s core ad business, which still accounts for most of its revenue, was affected by reduced demand from advertisers sensitive to rising costs, including\u00a0tariffs<\/a>.<\/p>\n

CFO\u00a0Derek Andersen<\/a>\u00a0said auction prices were negatively impacted by a recent change to the ad platform, which the company has since rolled back.<\/p>\n

\u201cWe\u2019ve seen ad revenue growth return to 3% to 4% as advertisers adjust their strategies,\u201d Anderson told analysts.<\/p>\n

The earnings come as Snap faces stiff competition from rivals like\u00a0TikTok<\/a>\u00a0and\u00a0Meta<\/a>\u2019s Facebook and Instagram. A Reuters\u00a0report<\/a> on the earnings notes that advertisers are turning to these larger platforms as they scale back ad spending in the midst of economic uncertainty. Meta and\u00a0Reddit<\/a>\u00a0both recently posted more upbeat earnings.<\/p>\n

\u201cThe digital ad tailwinds that propelled Meta and Reddit to blowout quarters turned into a light breeze for Snap,\u201d said eMarketer principal analyst Jasmine Enberg, per Reuters.<\/p>\n

In different circumstances, investors might have overlooked the hiccups in Snap\u2019s ad platform, but now \u201cthere is little room for mistakes,\u201d she added.<\/p>\n

In response to these pressures, Snap is investing heavily in\u00a0automation and artificial intelligence<\/a>\u00a0(AI) to improve ad performance and reduce acquisition costs. Spiegel spotlighted the company\u2019s AI-driven Smart Campaign tools, which optimize bids and targeting.<\/p>\n

\u201cWe\u2019re especially excited about how AI can help\u00a0small and midsize businesses<\/a>,\u201d he said, which were the largest contributor to ad revenue growth in the quarter.<\/p>\n

In addition, Snap is adapting to how users engage with content. Time spent on its Spotlight short-form video feature rose 23% year over year, now making up close to half of all content viewed on the platform.<\/p>\n

\u201cWe\u2019re seeing users share Spotlight content with friends as a new way to start conversations,\u201d Spiegel noted, reflecting a shift in consumer behavior from direct posting to content-based interaction. Users are also spending 30% more time video chatting.<\/p>\n