By Snap, the company behind the popular photo-sharing app Snapchat, has announced that it will lay off about 10% of its global workforce, as it faces a decline in ad revenue and user growth. The move comes as Snap tries to cope with the changing social media landscape, where it faces stiff competition from rivals like Meta and TikTok, and the impact of Apple’s privacy changes.
Snap said that it will reduce its workforce by about 10%, or roughly 500 employees, as part of a reorganization aimed to “reduce hierarchy and promote in-person collaboration”. The layoffs will affect various teams and regions, and may extend into the second quarter of 2024, depending on local laws and regulations.
The company said that the decision was based on its strategic priorities and financial goals, and that it will provide severance and outplacement support to the affected employees. Snap also said that it will incur a one-time charge of about $75 million related to the layoffs, which will be reflected in its first quarter results.
Snap had about 5,400 employees as of September 2023, and had hired more than 1,000 people in the past year. The company had also expanded its offices and facilities across the world, including in London, Paris, Berlin, Mumbai, and Singapore.
Snap faces a slowdown in ad revenue and user growth
Snap’s layoffs come as the company faces a slowdown in its core business of advertising, which accounts for more than 90% of its revenue. Snap’s ad revenue grew by 57% year-over-year in the third quarter of 2023, but fell short of analysts’ expectations and its own guidance. The company also warned that its fourth quarter revenue would be lower than expected, due to the ongoing challenges in the ad market.
One of the main factors that has affected Snap’s ad revenue is the privacy changes that Apple introduced in its iOS 14.5 update in April 2021, which required apps to ask users for permission to track their activity across other apps and websites. This has made it harder for advertisers to target and measure the effectiveness of their ads on platforms like Snapchat, and has reduced the demand and prices for Snap’s ad inventory.
Snap has also faced a slowdown in its user growth, which is crucial for its ad revenue and engagement. Snap’s daily active users (DAUs) grew by 23% year-over-year in the third quarter of 2023, reaching 306 million, but missed analysts’ estimates and its own forecast. The company also said that its DAUs would grow by 20% year-over-year in the fourth quarter, which would be its slowest growth rate since 2018.
Snap attributed its user growth slowdown to several factors, such as the easing of pandemic-related lockdowns, which reduced the time and frequency that people spent on social media, the competition from other platforms, especially TikTok, which has attracted many of Snap’s younger and female users, and the technical issues and bugs that affected the performance and functionality of its app.
Snap tries to adapt and innovate in the post-pandemic social media landscape
Snap’s layoffs and slowdown reflect the challenges and changes that the social media industry has undergone in the past year, as the pandemic has altered the behavior and preferences of users and advertisers. Snap, which was once seen as a disruptor and innovator in the social media space, with its ephemeral and playful features, such as Stories, Filters, and Lenses, has now become a follower and imitator of its rivals, such as Meta and TikTok, which have surpassed it in terms of user base, revenue, and influence.
Snap has tried to adapt and innovate in the post-pandemic social media landscape, by launching new products and features, such as Spotlight, a short-video platform that competes with TikTok, Snap Map, a location-based service that shows users what is happening around them, and Scan, a visual search tool that uses augmented reality (AR) to identify and interact with objects. Snap has also invested in developing its own hardware, such as Spectacles, a pair of smart glasses that can capture and share photos and videos, and its own software, such as Camera Kit, a platform that allows developers to integrate Snap’s camera and AR features into their own apps.
However, Snap’s efforts have not been enough to overcome its challenges and regain its momentum, as it has failed to attract and retain users and advertisers, and to differentiate itself from its competitors. Snap has also faced criticism and scrutiny over its content moderation and privacy practices, as it has been accused of allowing the spread of harmful and misleading content, such as bullying, harassment, and misinformation, and of collecting and sharing users’ personal data without their consent or knowledge.
Snap’s future is uncertain, as it faces more pressure and uncertainty from the market, the regulators, and the users, and as it tries to find its niche and value proposition in the post-pandemic social media landscape.