Things have been rocky for Snapchat. After going public in March 2017, Snap Inc has seen its stock price drop by more than 50 per cent in a little more than a year, while taking a $53 million loss on unsold Spectacles and more or less cancelling a redesign that had users complaining in protest. So in an attempt to generate more revenue, Snapchat is inserting new unskippable ads into its still relatively popular social media app.
The good news, though, is that if you just use Snapchat to talk to friends or follow your favourite celebrity, you may never actually see these ads. That's because Snapchat's new six-second commercials will be spliced into videos from its "Shows" section, which features longer-form videos produced by ESPN, NBC, Viacom, and others.
Originally announced in April, Snap has been testing these ads over the last month before officially going live with them this week. However, it seems there are still some issues with the implementation of the new commercials. That's because, on top of being unskippable for the first time, the new ads apparently don't yet include any hyperlinks or additional information about the products in the actual ad. So in the event that you actually see an ad for something you want, you'll still need to leave the app and resort to a Google search to learn more.
With unskippable ads, Snapchat may be paving the way for premium subscriptions similar to what Google does with YouTube Red, which eliminates commercials in exchange for a monthly fee. Regardless, after revealing lacklustre growth and higher losses in its latest earnings report, it's hard to fault Snapchat too much for trying out new methods of bringing in money. The question now is: Will the increased revenue from ads offset the number of users these same ads could potentially drive away? If not, there's a good chance Snapchat could continue on its slow, downward trajectory.