Snap’s big quarter: seeing its growth in Singular data

Snap just announced a big quarter with significantly improved revenue, users, earnings, and more. What’s interesting is that we can see that growth in Singular data.

Snap’s big quarter, the TLDR

So Snap improved in most metrics that big social platforms want to improve in:

• DAUs were up 9%
• Time spent watching content on platforms was up 25%
• Subscribers more than doubled
• Revenue was up 15%
• ARPU was up 5.8%
• Cash flow was up almost 800% (!!!)

 

 

All of that is great, though it’s also true that daily active users did not grow in North America, Snap’s most profitable region. Most user growth was in “rest of world,” which is not North America and not Europe. ARPU did grow pretty much everywhere, but it varies vastly across the globe:

• North America: $8.54
• Europe: $2.52
• Rest of world: $1.09

Revenue growth at Snap: we can see it too

At a high level, revenue growth for a platform like Snap, Meta, TikTok, or YouTube is a pretty simple equation, right? There’s generally only 4 things that matter:

1. Number of users
2. Amount of time they spend on-platform
3. Ad load during that time
4. Price of ads

There’s subscription revenue, potential e-commerce revenue as the big platforms diversify into retail or shopping experiences, but that’s pretty much it.

Snap is clearly growing in number of users, and even where users are flat — like North America — it’s growing time on platform, which increases addressable ad supply.

 

 

Price of ads, however, is a function of advertiser demand.

That’s something we see in Singular’s Quarterly Trends Report, due out next week. (But yeah, as the author, I kinda know what’s in there.)

1 of the indicators we check on regularly is the number of advertisers each platform adds or loses in a given quarter. We’re seeing growth there for Snap, and the company says that the number of advertisers on the platform doubled year-over-year.

But the big number we’re seeing for Snap is 3.

Or, more specifically, third.

And that’s third place globally for increased ad spend growth quarter over quarter, Q2 to Q3. I’m not revealing who was first or second — you’ll have to wait next week until we release the Q3 2024 Quarterly Trends Report for that — but Snap added more revenue from Singular customers than TikTok, Amazon, Reddit, and almost any other ad network or platform you can name. 

Other than 2, of course.

(1 of which will be a surprise, I guarantee it.)

What’s growing revenue at Snap?

We know the challenges Snap had around ATT and SKAdNetwork. Those ecosystem-level changes cost Snap multiple down quarters that had the company’s stock leaking badly.

Big platforms have largely adapted to ATT and SKAN, however, in a couple of different ways.

1. Conversion APIs, or CAPIs
2. Platform probabilistic, or roll-your-own modeled measurement like Meta’s Advanced AEM, TikTok’s Advanced SAN, or even Snap’s own Advanced Conversions, Google’s Modeled Conversions, or similar offerings from X and Pinterest

What we saw in Snap’s previous earnings (Q2 this year), which were also positive, is that CAPIs had become a super-big deal for the company. CAPI integrations grew approximately 300% year-over-year at Snap, the company said. 

That’s indicative of a growing direct response or performance advertising focus. And that’s what we find in Snap’s newest earnings report:

“Ongoing momentum with our direct response products and growth in small- and medium-size businesses contributed to total active advertisers more than doubling year-over-year in Q3,” the company says.

So measurement is getting better, which is helping Snap justify ad prices.

And all the other parts of the growth equation are surging as well: users, time spent, and even ad load. Snap stated in its earnings report today that it has both recently launched 2 new ad slots and is experimenting with 2 new ad formats.

From Snap’s press release:

• We are in the early stages of experimenting with two new ad formats, Sponsored Snaps and Promoted Places, to help businesses reach Snapchatters in engaging ways across our differentiated service.
• We launched First Lens Unlimited, which offers advertisers the first impression of the day in the first slot of the Lens Carousel, allowing them to reach our community at greater scale.
• We launched State-specific First Story, which allows US advertisers to target First Story takeover campaigns to individual states or to reach the entire country with different creative for each state, as selected by the advertiser.

In other words, the flywheel seems to be pointed in the right direction at Snap.

Still a long way to go

Of course, there’s still a long way to go. Plus formidable adversaries in the other platforms, who all want growth in advertisers and revenue as well.

Snap still had a net loss this past quarter, though it improved 58% year-over-year.

Snap reported a quarterly profit back in 2021, but generally for the first 5 years of its existence prior to that and the years subsequent the platform has invested in growth more than designed for profitability. At some point even Amazon had to finally turn a profit, and I suspect the same is true for Snap.

That seems much more likely now than it did just a few short quarters ago.

The lesson from Snap: grow your measurement capabilities, and advertisers will follow.

If, of course, the audience they want is there too.