Snapchat is responding to sluggish growth with job cuts

Snapchat

Company boss Evan Spiegel wants to cut a fifth of the jobs and reorganize the advertising department.

(Photo: Reuters)

new York The photo messenger service Snapchat is experiencing historically low sales growth for the company and is therefore cutting jobs. At eight percent, the increase in sales in the third quarter is probably the smallest increase in the company’s history since the company went public in 2017 – if the trend persists, said Evan Spiegel, head of Snapchat’s parent company Snap, in a public statement to employees.

The California network – known for deleting messages and photos once received – has seen rapid growth in the past. But that has changed. Snap now wants to cut a fifth of the jobs and rebuild its advertising department. At the end of 2021, the internet company employed more than 5,600 people.

Advertising spending is falling in the face of rising inflation, rising interest rates and concerns about an economic downturn – this hits the group Snap, which depends on advertising revenue.

The advertising business also accounts for a large part of the income of other Internet giants, so Snap is considered one of the indicators for the development of the industry. Snap had to adapt to the new market environment, Spiegel warned.

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“Today, we are restructuring our business to focus more on our three strategic priorities: community growth, revenue growth and augmented reality,” i.e. offerings around the topic of virtual reality, according to Spiegel in the announcement. The apps Zenly and Voisey – also social networks – would be discontinued as a result.

Kelsey Chickering, analyst at the consulting firm Forrester, draws a comparison with the Chinese app TikTok. While Snapchat’s “leading capabilities” in virtual reality are trending, “the platform has never been able to match the addictive nature of TikTok,” Chickering said.

Snapchat not as important to advertisers as Facebook

Snap’s product improvements have never reached the same quality as TikTok’s in order to keep users “infinitely” entertained and committed to the app in the long term. According to a Forrester analysis, 42 percent of Americans between the ages of 18 and 25 describe TikTok as addictive, but only 21 percent describe Snapchat.

>> Read also: Tech industry fears slump in advertising business – Snap shares crash

For advertisers, Snap is a welcome addition, but not as important as, say, Facebook. This is particularly true in the current difficult economic environment.

In his statement, Snap boss Spiegel emphasized the importance of the new organizational director Jerry Hunter. He will take care of the monetization of the platform and the networking of the technology, sales and product teams.

With material from Reuters

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