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Wednesday, April 22, 2020

Snapchat's use is increasing but with limited media dollars in the market

Snap INC's strategy is paying off. The company said in its earnings call today that it grew its daily active users by 11 million this quarter and by 20 percent year over year. During the first quarter, 60 Snapchat shows reached over 10 million viewers, and more than 20 million people watched a Snap Original that debuted in March. Communication with friends also increased by over 30 percent in the last week of March compared to the last week of January, with more than a 50 percent increase.

Snap Inc.

Although this is all good news for the company, it doesn’t change the fact that Snap is still an ad-based business that’s now competing for hard-to-come-by ad dollars, as the market shrivels up in the midst of a pandemic-spurred economic downturn. The company saw $462 million in Q1 2020 revenue, a 44 percent increase from Q1 last year

The online advertising business has mostly cratered as businesses close because of social distancing restrictions, and travel around the world is halted. The media business has been particularly hard hit. Local businesses are pulling back on advertising, and larger brands are focusing their efforts on sustaining their own businesses during this period of economic uncertainty. Snap has always competed with Google, Facebook, and Twitter for advertising dollars, but as different brands’ budgets tighten, Snap will have to make a more compelling case than those platforms for why advertisers should spend their marketing money at Snap

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