Speaker 1: Okay, we're having look at Snapchat and Snapchats parent company
Speaker 1: sashing stuff, scaling back investments in struggling businesses, all in
Speaker 1: an attempt to rain in costs following a slowdown and
Speaker 1: add revenue growth. Let's get to the details on this
Speaker 1: and other similar companies. Alex Sabrinka Social Media reported joins is, Alex,
Speaker 1: what do you make of this? And you know how
Speaker 1: struggling is this business? And is the business model here
Speaker 1: wearing thin? Yeah? So I think that this is a
Speaker 1: pretty big deal for this company and it's in a
Speaker 1: really bad year currently. The shares are down to the
Speaker 1: tune of seventy six percent for the year, so clearly
Speaker 1: there are not a lot of votes of confidence that
Speaker 1: they're after the right thing right now. So it's all
Speaker 1: told in the news that came out Today's as you mentioned,
Speaker 1: now is cutting its workforce. It's also killing a lot
Speaker 1: of projects that are kind of ancillary to its core
Speaker 1: Snapchat app. Um, there's a flying drone that takes pictures, Um,
Speaker 1: it's snap original. These shows in series that produced, they're
Speaker 1: basically culling anything and everything that is not in service
Speaker 1: of expanding its ad sales or bringing on kind of new,
Speaker 1: meaningful um revenue streams for the business. So did this
Speaker 1: company become overly ambitious as a result of maybe a
Speaker 1: spike in business during the pandemic. Did they become a
Speaker 1: little self deluded. I don't know if self deluded. I
Speaker 1: think it's part of the Snap DNA to kind of
Speaker 1: create quirky new products and really see what works. The
Speaker 1: problem with that is, you know, when investors expect those
Speaker 1: products to turn into money winning opportunities. Um, if you
Speaker 1: do see sales kind of take a huge decline like
Speaker 1: they did this year, that becomes a problem. Snap is
Speaker 1: in this interesting place where you know, they're competing for
Speaker 1: dollar share from marketers budgets, against meta's, Facebook and Instagram,
Speaker 1: against Google and YouTube, against all of these kind of
Speaker 1: really big um competitors where advertise users can put their
Speaker 1: dollars and have a really clear picture on the return
Speaker 1: on investment of those dollars. Snaps add products are a
Speaker 1: bit different, Like they have some videos and ads that
Speaker 1: they can put in in between publicly posted content. You
Speaker 1: also can as a brand kind of build a bespoke
Speaker 1: lens like a filter to put in the app. All
Speaker 1: that's to say it requires a lot of work. Um,
Speaker 1: and these are kind of brand type narrative activations that
Speaker 1: a lot of marketers might be killing right now. So, Um,
Speaker 1: you know, back to your question, like is a delusion,
Speaker 1: I don't know, Like they think of themselves as a
Speaker 1: is a innovative product company, but it's clear that the
Speaker 1: company now is saying that they need to focus on
Speaker 1: where they really, you know, make their bread and butter
Speaker 1: in terms of the business. Alex. Also, I mean, we've
Speaker 1: got changes to Apple's operating system and that's making it
Speaker 1: difficult for snaps app and indeed also at the same
Speaker 1: time Meta and companies either to track user activity. Yeah. Absolutely,
Speaker 1: So that change that happened in the iOS fourteen update
Speaker 1: more about a year into that here, And what that
Speaker 1: did is is, to your point, make it much more
Speaker 1: difficult for social media platforms to basically track the effectiveness
Speaker 1: of ads on the platform. Um. Snap Also, you know
Speaker 1: their head of their chief business officers leaving for Netflix.
Speaker 1: She's the one who oversaw ad sales. Her departments are
Speaker 1: actually getting moved over to a new chief operating officer
Speaker 1: who comes from the engineering department. It seems like them
Speaker 1: kind of marrying engineering with the ad sales could be
Speaker 1: a way to get them a little bit closer to
Speaker 1: some workarounds that they're having to find because of the
Speaker 1: changes to Apple's policies that made it much more difficult
Speaker 1: for them to um, you know, gauge the metrics of
Speaker 1: success for the ads that marketers are paying for. So
Speaker 1: are they dialing back on ambition to create their own content,
Speaker 1: whether it's some kind of show or series. Are are
Speaker 1: they becoming less aggressive in that front? Yeah? Absolutely so.
Speaker 1: Snap Originals is something that was on the chopping block.
Speaker 1: This was something that's been around for a long time
Speaker 1: since the part of the Snapchat app called the Discover
Speaker 1: Explore page was around. These are the shows in series
Speaker 1: that Snap produces. It looks like advertisers and brands are
Speaker 1: able to still post those these kind of you know,
Speaker 1: longish form for social media videos, but their own content.
Speaker 1: That is one of the things that has fallen below
Speaker 1: the line and probably where some of the workforce that's
Speaker 1: being cut is coming from. Now, let's not forget also
Speaker 1: Alex here that we've got so many entrance now, TikTok, Netflix,
Speaker 1: Walt Disney all coming up with ad supported streaming, uh
Speaker 1: streaming a video now that's just really taking out more
Speaker 1: and more of the pie. It's it's the pies remain
Speaker 1: the same. There's more people competing for their share, absolutely,
Speaker 1: and Snap is getting a smaller slice. You know, you
Speaker 1: mentioned TikTok I cover their US operations for us here
Speaker 1: at Bloomberg. TikTok goes after kind of the same customer
Speaker 1: that snapped US. Snap has historically really one this younger
Speaker 1: teen and twenty something customer and and really kind of
Speaker 1: UM at least owned the reputation for that market here
Speaker 1: in the US. In particular, TikTok swept in with a
Speaker 1: really kind of sticky, engaging app and frankly with a
Speaker 1: lot of UM advertising tools and ad slots that are
Speaker 1: more valuable to some of these advertisers. So, whether it's
Speaker 1: the battle for young users or the battle for UM,
Speaker 1: the folks who are paying for the attention of young users, UM,
Speaker 1: they definitely have a big, big, a lot of competition,
Speaker 1: particularly UM from TikTok with on that pie, which is
Speaker 1: you know, as we said, shrinking in these kind of
Speaker 1: uncertain economic times, Alex very quickly, does the board still
Speaker 1: have confidence do you think? In CEO Evan Spiegel very
Speaker 1: quickly twenty seconds or so. Evan and his founder have
Speaker 1: ninety nine or so percent control, so if they have
Speaker 1: confidence in him, it seems like it, but they have
Speaker 1: a majority of the voting control of that company. All right,
Speaker 1: I'll let you decide, all right, Thanks, good stuff. Alex
Speaker 1: Barenka is Bloomberg social media reporter, joining us here on
Speaker 1: Dave Breakcasia