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Will Social Commerce Save Snapchat?

By Rick Munarriz – Apr 18, 2018 at 5:19PM

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Snap hopes its new Shoppable AR features will help make Snapchat's traffic more tempting to advertisers.

Snapchat parent Snap Inc. (SNAP -3.63%) remains in the market's doghouse as one of last year's busted IPOs, but it's hoping that new e-commerce tools will help make the social platform more attractive to advertisers. Snap is introducing Shoppable AR, tapping augmented reality and Snapchat's Lens feature as a way to help generate more leads for marketers. 

Shoppable AR lets advertisers pay to attach buttons to the camera-lens feature that dolls up selfies and other snapshots with superimposed imagery. These sponsored buttons can send users to a company website, promotional video, or app installation page. The marketing platform launched on Wednesday, with Clairol and Adidas pushing product pages, King promoting Candy Crush app downloads, and STX Entertainment streaming a trailer for Amy Schumer's I Feel Pretty movie ahead of this weekend's debut. 

Snapchat's original World Lenses feature in action.

Image source: Snap, Inc.

Monetization is the name of the game

Snapchat continues to trade below last year's IPO price of $17. It poked its head above that mark briefly after posting better-than-expected financial results two months ago, but the shares have been drifting lower in recent weeks. The stock is essentially back to where it was when the year began, and that follows a rough 2017 that found the stock taking big hits after its first three quarterly reports as a public company. 

Snap's been sliding lately on concerns that its popularity may be peaking. An app redesign pushed out late last year has been panned by influential celebrities, and layoffs carried out earlier this month aren't exactly going to instill confidence in growth investors. However, until we get Snap's latest financial snapshot -- it reports first-quarter results after the close on May 1 -- we're left with a company that had surprisingly healthy momentum as 2017 came to a close. The 8.9 million net increase in daily active users that it scored through the final three months of last year was its strongest quarterly increase as a public company.

Monetization always has been the hurdle for a platform built for jaded young'uns who have an uncanny way of sidestepping marketer advances. We'll see how Shoppable AR changes things.

Snap claims that more than half of the country's 13- to 34-year-old people play with its AR Lenses feature in any given week. If Snap is able to make it a more compelling sponsored platform by giving advertisers creative ways to reach that elusive demographics group, it will obviously help a company that already surprised investors with its better-than-expected 72% top-line growth in its most recent quarter.

Snap came public last year with folks more concerned about its ability to cash in on its traffic than its ability to sustain its popularity. The script has been flipped, and now Snap will need to prove that it can keep its audiences growing as it rolls out revenue-enhancing features.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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