Snapchat Ad Portal Slowdown Preceded Earnings Warning

Snapchat is having enough trouble with advertising that, earlier this week, parent company Snap Inc. felt obligated to revise downward revenue and earnings guidance it had issued just a few weeks before. Snap blamed broader economic conditions, but even before the disclosure, warning signs could be found in declining traffic to Snapchat’s ad buying portal.

Key takeaways

• Visits to ads.snapchat.com, the company ad portal, were down 23.9% year over year in April, according to Similarweb estimates.
• The contrast with fast-growing TikTok, a rival for snackable video that’s popular with young people, is stark – traffic to TikTok’s ad portal was up 173.8% year over year in April.
• Snapchat has also fallen behind TikTok on other key metrics, such as app downloads and market penetration, at least on Android.

Lagging TikTok and others in advertising

Like TikTok, Snap Inc.’s Snapchat has a strong focus on short, fun mobile video sharing, but advertiser interest in the two has been diverging. Ad portal visits (forbusiness.snapchat.com + ads.snapchat.com) were down about 9% in the first quarter, according to Similarweb estimates. Ad portal visits tend to be a reliable leading indicator of ad revenue. TikTok has also edged ahead of Snapchat in app downloads, at least on Android (see below). A recent survey found that TikTok has edged ahead of Snapchat as the favorite app of teens.

For growth in advertiser interest, nobody beats TikTok right now.

In April, visits to TikTok’s ad portal were up 173.8%, while visits to ads.snapchat.com were down 23.9%, year over year, in April, according to Similarweb estimates.

Despite that, Snap said that revenue for the first quarter was up 38%. As part of its earnings release, it forecast that revenue for the quarter ended in June would be up 20% to 25%. In this week’s warning, Snap didn’t provide new guidance, but it acknowledged the previous guidance was too optimistic.

Putting the rivalry in context

To put the TikTok versus Snapchat rivalry in context, both remain relatively small compared with YouTube, which is still the most visited online video site, or Facebook.

The comparison shown below gives some sense of proportion, although the business.facebook.com domain is used for other purposes in addition to ad sales, and YouTube ads are sold through the same portal as Google search ads.

Losing ground in apps

Snapchat, TikTok and other social media companies sell ads on the web, but much of their interaction with users happens in apps. For Android, the mobile platform for which we have the best statistics, TikTok had over 20 million more downloads in March than Snapchat, leading 98.7 million to 76.9 million, according to Similarweb estimates. TikTok also led in install penetration or the percentage of Android devices that have the app installed.

Innovator versus innovator

TikTok has gained traction as an innovator with a video distribution algorithm that accurately predicts what videos users will want to watch, while its video creation tools make it easy for users to incorporate popular music into dance videos and to create their own videos riffing off others in their social stream. Snapchat has also been known as an innovator, however, first gained popularity for the ability to send private messages and video clips that would automatically expire off the service. It popularized the use of video filters and was a pioneer in the use of augmented reality glasses.

Both services are popular with young people (although not only young people), but the problem with catering to the youth market is that tastes often change and change quickly. For Snap to regain the favor of advertisers, it must excite its users once again.

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