As Snap gears up to cash in on AR (again), advertisers stand ready for some clarity
Snap CEO Evan Spiegel believes that augmented reality could eventually drive ad dollars into his business. But it’s safe to say advertisers aren’t convinced just yet.
It’s not that there’s anything fundamentally wrong with this type of advertising; they just want to see more clarity on what Spiegel actually means.
The only insight they have into Snap’s AR plans came from interviews he gave during his company’s recent partner summit, where he hinted that upcoming investments in AR and a new operating system could bolster the platform’s ads business.
As he told Axios, Snap’s focus on AR and developing its own operating system could help diversify its business model in the future, potentially expanding its advertising opportunities. He added: “I think in the early days, our advertising partners will be thinking about how to extend their core brand experiences through Spectacles.” Spectacles are cordless, compact AR glasses powered by Snap OS.
This has been a long-standing goal for Spiegel; ever since AR became a staple of Snapchat, Spiegel has aimed to extend that potential to advertisers. But, like many flashy innovations, the initial excitement often gives way to reality. The ads were way too expensive at a $500,000 minimum for most brands when they launched, which proved prohibitive for many.
Even the introduction of a cheaper tier allowing advertisers to convert a 10-second ad to AR for $50 didn’t make a significant difference. They still faced hefty costs for creating those ads, which were never cheap to begin with.
For AR to become the advertising goldmine Spiegel envisions, Snap needs to make the technology more accessible to marketers, just as it did for its users.
This is arguably a bigger challenge for the platform, and Spiegel has acknowledged it. Earlier this month, he pointed to Snapchat’s struggle to capture ad dollars from smaller businesses as a key reason why it hasn’t been able to carve out a larger share of the ad market since its launch a decade ago. How, and more importantly if, AR can align with this pivot remains to be seen.
