Snapchat Suffers from Advertising Downturn – a General Trend?

Snapchat has dropped from a company valued at $25.5bn when it was first put on the market to $17bn today, mainly due to the fall in advertising revenue over the last months in the USA. The result – downsizing staff by 20%.  Many reports have stressed the rapid reduction in advertising revenues since April this year, driven by a soft global economy, the residual effects of the COVID pandemic, the Ukraine/Russia war, and continuing global supply chain issues which have, among other problems, caused a shortage of semiconductor chips. Government policy in many countries has not helped the situation – opting for restrictions and creating adverse reactions (the continuing China/USA argument over semiconductors being a prime example).

A perfect storm has been created, which suggests that Snapchat will only be the first social media company forced to pull its horns. Most business economists agree that dropping marketing support (of which advertising is the largest and most obvious component) during economic recessions is a serious mistake for enterprises. Moreover, advertising has, and continues to, fragment, and PR has taken far greater importance in the marketing mix. The role of new digital technology also will play an increasingly essential role in the economy, and in marketing, from virtual shopping advisors to next-gen digital content.