Snap's Advertising Model Leading Company To Profitability

About 1,400 brands advertised on Snapchat in 2018, with most running one-off campaigns during only one quarter during the year, according to data released Wednesday. 

Comcast, Mars, AT&T, Adidas and P&G were the top five advertisers in terms of the amount spent, according to MediaRadar. Media at 30%, tech at 13% and retail at 10% accounted for more than half.

Snap, which reported revenue of $390 million in the quarter, touted that the company is moving closer to achieving profitability. 

“We have maintained a relatively flat cost structure across the past five quarters, while growing full-year revenue of 43% year-over-year, with 100% of our incremental Q4 revenue flowing through to our bottom line,” said Evan Spiegel, chief executive officer at Snap, during the earnings call.

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In 2018, Snap redesigned its app, allowing people to search and find more content, and launched Commercials, which supports a non-skippable video ad format.

These changes, per the company, along with the self-service advertising platform, helped to “double the advertising revenue” generated from premium content in the fourth quarter, when compared with a year ago.

“We are building a mobile-first, engagement-driven, sustainable advertising business in a privacy-safe way for our users that drives real business outcomes,” added Jeremi Gorman, chief business officer at Snap. 

And while Snap doesn’t quantify the percentage of its revenue that comes from premium content, Gorman did say the company made a “deliberate pivot to work with direct-response advertisers last year as we shifted to self-service.”

Gorman also said that Snap is seeing high-performing ads that advertisers can bid against their key performance indicators, and that the company is seeing strong results in direct-response business.

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