If your brand utilizes Snapchat to reach a younger and larger audience, it might be worth it to take note: Q3 earnings were not indicative of a market blossom. The share price of Snap, the parent company of Snapchat, dropped dramatically from Q2 reports and came in way under forecast.
With a predicted $237 million in revenue for Q3, the $207.9 million reporting has been disappointing to both consumers and shareholders, and of course, to the companies who have tapped Snapchat as a marketing tool.
Making matters a bit hazier, user growth failed to live up to analyst expectations. Analysts projected the user growth would notch 181.8 million by the end of Q3 but the number came in short at 178 million.
“We are going to make it easier to discover the vast quality of content on our platform that goes undiscovered or unseen every day,” said chief executive Evan Spiegel, noting a platform redesign.
Though marketers should be cautious of funneling too much activity and effort into Snapchat, it is interesting to see that the company is still having marginal advertising success. Compared to Q3 of 2016, Snap reported five times as many ad buyers through its automated auction system.
Due to the nature of the automated auction, advertisers are getting a lucky price point for ads; the auction has a lower price-point thanks to no fixed rate. Sad news for the Snap sales team, but good news for anybody wanting to take advantage of a (likely) temporary system.
“As we onboard more advertisers and multiple advertisers compete for the same ad impression,” Spiegel said, “we should see higher pricing.”