Following a tough 2018, Snap – the company behind Snapchat – has been making strong gains.
Last year was especially tricky for the social media firm, and had many marketers – and users – questioning whether Snapchat was still worth it.
With strong results in the last three quarters, though, it would appear the company has managed to find its footing (note: this includes the fourth quarter of last year, during which Snapchat enjoyed the holiday surge).
In fact, Snap reported 48% year-on-year growth in revenue for the second quarter of this year ($388 million). Moreover, with the addition of 13 million daily active users (DAUs) during that period, Snapchat for the first time also passed the 200 million mark of DAUs.
A difficult 2018
What I find particularly interesting about Snapchat’s comeback is this: Despite the stumbling blocks it hit last year, the company has nevertheless been able to improve its self-serve ad platform, developing an advertising ecosystem that’s enticing marketers and increasing both ad engagement and revenue growth.
Impressive, considering that less than a year ago many marketers would have avoided spending their budget, time and resources on the platform after watching it stumble.
Indeed, a couple high-profile PR crisesOpens a new window exposed the fact that it doesn’t take much to hurt Snapchat’s user base and valuation, which sent marketers’ confidence in the company plummeting.
First was the Kylie Jenner tweet criticizing SnapchatOpens a new window  — her single negative comment about the social media network caused Snap stock to close down 6% that day, effectively knocking some $1.3 billion from the company’s market value.
Weeks later, there was the Rihanna fiasco, in which the pop star called for her fans to get rid of Snapchat after it ran an ad asking users whether they’d prefer to “Slap Rihanna†or “Punch Chris Brown.†Unsurprisingly, Snapchat took a lot of heat for pushing an ad that made light of domestic violence and, after Rihanna publicly shamed the company, share prices slid by 5%, wiping $800 million off the company’s value.
Yet…here we are. After losing five million DAUs in 2018, Snapchat now boasts 15 million more users than a year ago (an 8% increase, year-on-year). Meanwhile, the most recent quarterly revenues are significantly higher than they’ve ever been for a second quarter.
Why advertisers should care
Snapchat has been striving to grow its share of the digital ad spend market, and it seems like it may be succeeding.
Having gradually fallen over recent years behind Facebook, Instagram and Pinterest, among other platforms, there clearly is a significant focus within the social media firm to rake in companies’ ad dollars by offering a new and improved ad-serving platform.
“Over the past few years, we have built a large and unique audience, created effective and engaging mobile ad units, and migrated to a self-serve monetization platform,†said CEO Evan Spiegsl in a prepared statemenOpens a new window t. “We’re now working on scaling demand on our platform by helping advertisers of all types and sizes generate returns on their ad spend.â€
Earlier this year, for instance, Snap SelectOpens a new window  was launched, a service that provides advertisers access to premium video inventory, and allows them to reserve inventory at a fixed cost per mille. As part of this new function, the company also brought in a proposal feature that media buyers can use to review Snap Select plans.
These improvements should matter to advertisers as it’s evidence that Snapchat is trying to position itself as a reliable vehicle marketers can use to target potential customers.
Snapchat advertising isn’t for everyone
Advertising on Snapchat is a great idea specifically for brands targeting younger generations. It focuses especially on Generation Z and millennials: While 75% of the global 13-to-34-year-old population actively uses the app, 94% of American young adultsOpens a new window between the ages of 18 to 24 are on Snapchat.
And to the company’s credit, it appears to have realized — and embraced — that fact, offering brands a way to target a consumer demographic historically difficult to reach through advertising.
Spiegel argues that Snapchat’s popularity with young consumers makes it “larger than services like Facebook and Instagram among this audience…demonstrating the broad-based appeal of our service.†He made the point to highlight how the social media company intends to position itself against its main competitors.
Snapchat’s value proposition for advertisers isn’t just its young user base but also that the base ishighly engaged and active: People on the social network use the app more than 25 times a day, with more than 60% creating original content daily.
And Snapchat says that it reaches 90% of 13-to-24-year-olds.
Ultimately, Snapchat’s resurgence may convince brands that want to get in front of young consumers that it’s worth spending some ad dollars on the platform.
With only a few positive quarters in the bag, there’s no proof yet that the positive upswing will last. After all, imagine if Taylor Swift makes an observation that sends Snapchat spinning into bankruptcy?