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Though AR hasn’t achieved the world-changing capabilities that were touted in its early hype cycle, it’s finding success in specific areas. Put another way, it won’t revolutionize everything but it will transform some things and bring additive value through immersive interactions.
One of those areas is AR marketing, including brand-sponsored lenses and dimensional product try-ons. And the company leading that charge is Snap. Aligned with its “camera-company” ethos, it has made an early commitment to social AR lenses and continues to double down.
What’s behind all this, and what are strategic implications? This is the topic of a recent ARtillery Intelligence report, which examines the drivers and dynamics of Snap’s AR business. It’s also the focus of Episode 66 of ARtillery Briefs, with top takeaways and full-episode embed below.
Crowdsourced Creativity
So what did the report uncover? Starting at the beginning, Snap’s path to AR revenue began with seeding consumer demand and cultivating behavior through interactive lenses. These gained early traction for animating already-popular activities like selfies and status updates.
Snap did this initially through lenses that it created in-house including fun, viral, and now-infamous fare like dog ears and rainbow vomit. The idea was to set the tone for lenses that align with Snapchat’s persona, and to make this emerging technology more approachable.
Seeing the success and traction of those lenses, Snap was then emboldened to take AR to the next level: a creator platform. So Lens Studio was born. The idea was to scale up AR development and broaden its use cases through the crowdsourced creativity of far-flung individuals.
Fast forward to today and Snap continues to attract creators through an ever-broadening set of features for building, promoting, and monetizing lenses in a low-code way. And that’s a key strategy because lens creators are the catalyst for the flywheel effect that Snap has engineered.
Virtuous Cycle
What do we mean by flywheel effect? The scale and creative variety achieved through Lens Studio have amplified engagement, which in turn attracts more creators to the platform. Resulting lens libraries then boost usage, which attracts even more creators…and around we go.
This virtuous cycle has brought massive scale to Snap’s AR business including 6 billion daily lens engagements. That’s equal to one lens engagement for every human on the planet per day. Snap also has 250 million daily active lens users – about 75 percent of Snapchat users.
That last figure is a key metric for Snap because it exceeds social AR competitors. For example, though Meta has greater overall reach with Facebook and Instagram, its share of users that engage with AR is less – about 27 percent according to ARtillery Intelligence estimates.
But the real significance of all that lens engagement is the direct line it draws to revenue. That happens as brand advertisers are attached to the AR scale that Snap has achieved. Indeed, if there’s one thing brand advertisers have in common, it’s being reach-driven.
Long-Term Commitment
In addition to sheer reach, brand marketers are drawn to AR’s creative capacity to demonstrate products with greater dimension. AR campaign case studies published by ARtillery Intelligence continue to validate this efficacy and performance versus 2D benchmarks.
That opportunity will grow as Snap expands lenses from the front-facing camera (selfies) to the rear-facing camera to augment the broader canvas of the physical world. That larger canvas importantly means a larger addressable market of brand advertisers – from cars to couches.
The other thing that rear-facing orientation does is future-proof Snap’s AR efforts. In other words, in the transition to AR glasses, all lenses will be world-facing. Snap admits that this transition will take years but it’s planting the right seeds today, including AR glasses themselves.
In closing, though Snap is facing ad-market headwinds – along with all ad-supported players – AR continues to be a bright spot. In fact, it invokes AR repeatedly in earnings calls and public comments to boost investor confidence. Among other things, this shows a real commitment to AR.
For more color, see the full episode below…
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