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Building from this week’s analysis of “camera marketing” and its revenue lead among AR subsectors, Snapchat in turn leads the way in that world. AR is not only aligned with the company’s “camera company” mission, but it has shown a direct correlation to revenue growth.
The latter can be a strong motivator. As we’ve examined, there’s a feedback loop at Snapchat that attributes AR investments to user engagement, revenue, and ultimately its escalating Wall Street performance. This drives the company to continue to double-down on AR investments.
That feedback loop was once again made evident at last week’s Snap Investor Day. Several Snap executives drew a straight line between AR and the company’s enviable revenue growth and stock market performance over the past several quarters. AR is a key part of that mix.
To provide more color, we’ve picked choice quotes, along with the full event footage, for this week’s XR Talks. See the video and narrative takeaways below, clustered thematically. And stay tuned for more Snap AR coverage….there will be ample activity in the coming quarters.
Three Pillars
How is Snap investing in AR internally? How is it operationally oriented to tackle the opportunity? And how does it align several moving parts towards its AR vision and master plan? Much of this traces back to the lens creator community it cultivates to scale AR content.
Or as Snap CTO Bobby Murphy puts it…
“Our augmented reality platform is driven by 3 major efforts: one, innovating in technology to unlock new capabilities in the camera; two, exploring creatively to design exciting and informative experiences; and three, supporting a growing community of AR consumers and creators. We’re investing heavily in each of these with incredibly talented technical and creative teams in which scientists, engineers, designers and product and community thinkers are working together to invent the future.”
Beyond organizational structure, there’s also underlying tech evolution. Snap is applying things like AI and LiDAR to boost AR. In fact, it was one of the first companies to release experiences that utilize Apple’s LiDAR sensors. It’s also advancing spatial mapping for location-relevance.
From Murphy:
“Historically, cameras were used for documenting moments, capturing a scene exactly as it is for the purpose of viewing it later in time. Now through developments in hardware and software, we can do a lot more than just capture a scene. We can understand, interpret, edit and augment a scene, and not just for later, we’re increasingly able to do all of this in real-time. This is the camera that will enable the next-generation of computing. And that’s why we are a camera company. […]
Neural rendering will lead to even more realistic visual transformation, enabling real-time, high-quality special effects. Landmarkers and Local Lenses are the precursors to large-scale robust 3D mapping, which will someday allow anyone, anywhere to engage with AR connected to any physical space. And Scan is the starting point to bring our vast growing library of AR experiences, not to your fingertips but immediately into your line of sight.”
Business Case
How does all of the above translate to revenue? Snap is a leader in not only capturing user engagement through AR, but monetizing it. That involves not only appealing to users but also brand advertisers. Next steps are to reduce campaign friction and expand into more verticals.
From Snap senior director of product Peter Sellis:
Our team will focus next on the camera via AR advertising. We’re going to do this by first, building the core behavior of AR as a utility; then second, making it easier for brands to create and experiment; and then third, we’ll pair it seamlessly with our powerful advertising platform.
We are investing in building new experiences for specific verticals where we believe AR can clearly augment the customer journey and provide value to businesses. We’re going to start with shopping. We’ve already partnered with several leading brands to leverage our technology for virtual try-on experiences. Through our recent beta program with over 30 brands across verticals from beauty to auto,
Snapchatters tried on products over 250 million times. These same Snapchatters were 2.4x more likely to click to purchase an average. Next, we’re making it easier for businesses to create, publish and share lenses with millions of Snapchatters.
Snap is already off to a good start in building an AR-based ad business, or what we like to call “camera marketing.” But can AR grow to be a standard part of the marketing mix? Can it become “table stakes” for brand advertising budgets….like mobile and video have become?
Snap’s Chief Business Officer Jeremi Gorman thinks so:
“Over the next few years, we believe our AR capabilities will become the next industry standard for mobile native advertising. We have already partnered with several leading brands to leverage our AR and ML technologies to power virtual storefronts and try on experiences such as Champs, Clearly, Dior, Essie, Kohl’s, Levi’s, Jordan Brand, Sally Hansen and Gucci, just to name a few.
The challenge with AR, which is different from our existing video ads business is that we’re still in the early stages of development of the AR industry in its entirety.
They are not often existing augmented reality budgets that these large agencies are within the brand. However, I’ve been in this industry a long time. And I remember when there weren’t distinct mobile budgets, video budgets, social budgets or e-commerce budgets either, but here we are in a place where those are core disciplines that each brand and each agency, so too will be augmented reality.”
Looking Forward
Snap also has one eye on a longer-term AR glasses future, for which it’s paving the way with Spectacles. They aren’t AR glasses, but they’re feeling out the social mores and design principles of face-worn tech. Mobile AR scales today, but smart-glasses are the endgame.
From Murphy:
“As powerful and portable as modern computing is, we are constrained in how we engage with it. Hunched over with our fingers tapping and swiping on small screens. Advances in technology will change this, overlaying digital experiences directly in our field of view and empowering us to engage with computing the same way we do as humans, with our heads up looking out at the world in front of us […]
Spectacles is our investment in this future. It’s an opportunity to design and develop a device specifically for augmented reality. We’re doing this incrementally by building and releasing increasingly more capable devices that are connected to the Snap platform. Over time, the same lenses that we’re starting to see on today smartphones, lens that can help you shop new outfits, see your favorite characters come to life or learn new things about the world, will be able to be experienced in full immersive 3D.”
Finally, projecting “sustained revenue growth of about 50 percent for several years assuming favorable economic conditions,” Snap CEO Evan Spiegel reinforced a commitment to investing in AR and building its creator community. The company will double down on AR in 2021.
From Spiegel:
“Augmented reality has evolved from something fun and entertaining into a real utility. Our camera can solve math equations, scan wine labels to find ratings, reviews, and prices, tell you the name of the song you’re listening to and so much more. […]
Our strategy is to take product innovations like augmented reality lenses and evolve them into platforms by building tools for creators and developers and providing distribution for their creations to reach the Snapchat community. “
See the full event video below. Special shoutout to ZDNet reporting for capturing many of the quotes used in this article.
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