Nevertheless, the executive said that the media company's monthly revenue from Snapchat plummeted by an average of around 60% from August 2022 to January 2023 after the introduction of the shows.
The executive blamed algorithm problems the platform is having, which they claimed started following Snap's layoffs at the end of August last year, for their company's decline in income. The executive described Snapchat as the company's strategy being "in a holding period."
According to a spokeswoman for Snap, the company's algorithm is always being updated and improved, so authors are not urged to cease sharing until the algorithm is rectified.
The media executive claimed that despite the drop in revenue, the platform is still lucrative. In terms of more than paying the costs of running the platform, it is still self-sufficient. In a way, it is a separate operation within the business with a separate source of revenue.
This publisher's tumultuous relationship with Snapchat is hardly unique.
Dropped ad income, problematic algorithms, and executive exits
Another news publisher, who also requested anonymity, claimed that their business's income is "significantly down" year over year, with the decline beginning in the middle of 2022. Although the firm produces material for Discover and Spotlight, Discover was largely responsible for the income decline.
Despite this, a corporate executive expressed confidence that the platform will address the problem quickly and stated that the team has not modified the strategy or altered how they approach the platform.
The Snap spokesperson added that there will be a significant investment made in streamlining the tools used for creating posts in the app. In the meantime, Snapchat wants to increase the number of content monetization opportunities this year as well as streamline the experience for publishing companies who use the app. They choose not to provide a specific release date for some of these upgrades.
Snap has been experiencing a number of changes, beginning at the end of August with a 20% decrease in employees, or 1,300 individuals. Snap has not been immune to the cost cutting tendencies that have hammered digital businesses over the past few months. Peter Naylor, vice president of ad sales, and Jeremi Gorman, chief business officer of Snap, both left the company to work for Netflix at the same time. The business then said in its Q4 earnings conference that it expected advertising revenue for the first three months of 2023 to fall by as much as 10%. Ben Schwerin, the platform's senior executive in charge of content and partnerships, most recently revealed he was departing the business after more than eight years, according to Variety.
Snap's most recent earnings and these leadership moves have gotten a range of reactions: With their social media and influencer acquisitions, some advertisers, who are already being careful with their spending, do not regard Snapchat as a key priority. Some people are less worried.
According to James Donner, partner and evp of investment at Decoded Advertising, who works with clients in the healthcare and wellness industries, “We are seeing stable demand from brands for Snapchat advertising. While growth in new social platforms has taken a bigger slice of the pie the last year, Snap is still a critical place for brands to reach consumers, with strong optimization tech and ability to drive business outcomes at the top and bottom of the funnel.”
Not all publishers are affected in the same way
Despite these difficulties, a few "content partners," which the platform's website defines as news organizations, media organizations, artists, and sports teams, continue to have success on Snap. Yet, Snap told investors that during Q4 17 of its top content partners saw more than 50 million views globally. It's less than the 25 content partners who met this criteria in the fourth quarter of 2021. Unnamed partners were there for this accomplishment.
One such publisher that has achieved success on Snap is the LGBTQ+-focused PinkNews of the United Kingdom. According to CEO Benjamin Cohen, there are just under 10 million subscribers across the 30 shows his team produces, making Snapchat PinkNews the platform with the most viewers and income.
As Cohen commented, "I think if we were launching on Snapchat Discover today, it would be a lot harder than it was when we launched in 2018 [when] there were a handful of publishers and it was, frankly, easier because it was a less crowded environment." More than 90 Discover publishers and program creators published alongside PinkNews in the year his business debuted on Snapchat.
With aspirations to expand into additional languages, PinkNews is still developing new shows for the platform in addition to the two languages it now distributes in, English and French.
Because they have over five years' worth of data on all of the different things they've done, Cohen noted that even while it's become a tougher platform, it's one that rewards people who have been faithful to it.
Too high a threshold for admittance
The amount of resources required to create content for Snapchat was too much for other publishers. According to a third media executive who spoke on the record under the condition of anonymity, it partly caused one mid-sized digital media business to stop using the platform completely in early 2022.
Publishers had to create these teams from scratch or give team members additional work because Snapchat required a different skill set that wasn't already in-house, unlike other social media platforms that make it simpler to republish existing content, like taking a TikTok and posting it on Instagram Reels. Snap has worked to lower this barrier for creators.
The third media executive remarked, "You kind of always start in the red."
Although this executive said that both viewership and revenue increased in 2021, the team noticed a decline in revenue in 2022. The third executive said that it became more difficult to distinguish out as more publishers entered the "cluttered market" to the point that you would need to in order to generate enough audience to earn money.
More financial control
Unlike other social media platforms, Snapchat did not allow the third publisher's sales staff to directly sell their content at the time, leaving them entirely dependent on Snap and the revenue-share model on Discover. As a result, Snapchat lost importance to this publisher.
Last year, Snap made a shift, and now the platform does provide publisher partners the option to sell advertisements directly in their content as well as against their viewers through the Business Manager of the platform.
According to Cohen, while the majority of Snapchat's current revenue comes from revenue-shares on programmatic advertisements, the company is beginning to explore show sponsorships, which would be offered either directly by the publisher and Snap or in conjunction with them. And by doing this, he intends to move the balance back toward direct income having a bigger percentage of revenue, as it did in the past when publishers could offer takeovers of their tales.
Despite this potential, the first publisher claims that "much of the revenue that we received from Snap is in the [revenue] share program [from Snap] themselves monetizing against our channels]."
