Snap Inc. CEO Evan Spiegel shared a long memo with employees Sept. 26 in which he outlined several goals, including full-year profitability in 2019.
The memo was obtained and shared by Alex Heath of Cheddar.
Growth and profitability
Spiegel said Snap Inc. will grow revenue three different ways: by increasing daily users and engagement; by improving measurement and optimization; and by boosting total active advertisers.
He added that growing daily users in “highly monetizable markets” like the U.S., U.K. and France will advance this goal in the short term, while looking further out, average revenue per user can be correlated with market penetration, and he said most incremental growth in those core markets will have to come from older users who generate higher ARPU.
Spiegel wrote, “Many older users today see Snapchat as frivolous or a waste of time because they think Snapchat is social media rather than a faster way to communicate. Changing the design language of our product and improving our marketing and communications around Snapchat will help users understand our value.”
He also addressed the issue of growing Snapchat’s user base in developing markets such as India, Indonesia, Mexico, Brazil and the Philippines, saying that the company must solve problems that are blocking people in those markets from accessing its services and adding, “The opportunity in terms of incremental user growth is enormous because these countries have very large, youthful populations. While serving these users will be an investment in the short term, adding users in these geographies helps us to deepen our moat.”
Spiegel also pointed to the age divide when discussing the client said, saying that “aging up” its community will also help the media, advertisers and Wall Street better understand Snapchat and adding, “A new challenge for our sales and marketing teams is to make every client a Snapchatter. In the past, we’ve tried to make presentations or videos to explain Snapchat to advertisers. This year, we are going to spend less time explaining and more time helping advertisers learn by using our product. This challenge extends to anyone at Snap that interfaces with our partners, the media or Wall Street. Rather than trying to explain everything, let’s help people use the product themselves.”
He touted Snap’s first-party measurement, saying that it helps advertisers better understand return on investment and improve the relevance and optimization of their campaigns to drive revenue while improving the user experience, adding that swipes was the only optimization goal when Snapchat debuted its self-serve advertising tool last year, and since then, metrics such as video views, site visits and application installs have been added to the mix.
Spiegel wrote, “This year, we will be investing more in our fully self-serve business, focused on the top 100,000 digital advertisers, to help them learn how to achieve their business objectives on Snapchat and drive measurable ROI. This means finding new ways to reach those advertisers and making it easier for them to get started with our Ad Manager.”
The ill-fated redesign
Spiegel addressed Snapchat’s controversial redesign last year, in which it shifted to an algorithm that separated Discover content from friends’ posts, as well its reversal of that redesign in May and its return to chronological order.
He wrote, “We rushed our redesign, solving one problem but creating many others … By launching our redesign quickly and separating social from media, we got ahead of the existential crisis faced by many platforms today. We led the way in our industry by curating broadcast content and separating friends from professional content creators. Unfortunately, we didn’t give ourselves enough time to continue iterating and testing the redesign with a smaller percentage of our community. As a result, we had to continue our iterations after we launched, causing a lot of frustration for our community.”