Snap turns 15: Evan Spiegel bets AI can unlock Snap’s next phase of growth

MUMBAI: Snap is looking to turn a decade and a half of experimentation into a sharper growth story. Fifteen years after Snapchat began life as a camera-first social app, Snap CEO Evan Spiegel has told employees that the company is at a turning point, with faster advertising growth and its long-awaited SPECS smart glasses project set to shape the next phase of the business.

In a note to employees on September 8, Spiegel made a forceful case for why he remains optimistic about Snap despite pressure on its share price and advertising growth. His central argument is simple: Snapchat has built a distinctive product, and artificial intelligence could help the company turn that differentiation into a much bigger business.

Spiegel pointed to Snapchat’s scale as the foundation for his optimism. In the second quarter, 971m people used Snapchat each month, while 493m used it every day.

But he argued that scale is only part of the story. Snapchat was deliberately designed around a camera rather than a conventional feed, private communication rather than follower counts, and interactions between friends rather than public audiences.

“TikTok has trends, Meta has scale, and Snapchat knows the real you,” Spiegel wrote, describing what he sees as the company’s biggest competitive advantage.

He said independent studies in the US, the Netherlands and Australia have found positive associations between Snapchat use and friendship closeness, friend support and wellbeing. Spiegel stressed that such research does not establish causation, but said the findings reinforce Snap’s belief that its focus on real relationships sets it apart.

Safety, meanwhile, remains a central part of the strategy. Spiegel highlighted Snap’s work from its first Parent Guide in 2013 to its latest AI-powered systems for detecting and preventing harmful behaviour. He also said safeguards for teenagers would remain a priority.

Snap has spent heavily on growing its community, developing its products and building SPECS, putting pressure on profitability.

The company has never posted a full-year GAAP net income profit. Spiegel, however, believes that could change soon. Analysts expect Snap to become GAAP profitable for the first time in 2027 as revenue growth begins to outpace its cost base.

The biggest variable will be advertising.

Spiegel said that over the next three to five years, the pace of advertising growth will largely determine Snap’s profitability. He illustrated the stakes by pointing to a potential difference between 15 per cent annual advertising revenue growth and 5 per cent growth, saying the faster trajectory would generate substantially more net income.

“After helping to keep our community safe, ads revenue growth will be our #1 business priority across Snap,” he said.

Snap has already rebuilt parts of its advertising business following Apple’s platform policy changes in 2022. Impressions and conversions have increased, while CPMs have fallen. Small and medium-sized businesses now contribute more than 30 per cent of advertising revenue, giving Snap a broader advertiser base.

But growth remains a concern. Advertising revenue increased 9 per cent year on year in the most recent quarter, slower than some of its biggest rivals.

Spiegel believes the answer is to make better use of what makes Snapchat different.

The biggest opportunity, he argued, could come from AI-powered understanding of user intent.

People do not always explicitly search for what they want. On Snapchat, they photograph things, message friends, use the Map, ask for recommendations and discover products through creators.

Historically, connecting those scattered signals into a clear picture of what someone might want has been difficult. Spiegel believes multimodal AI models can change that by combining different user actions and generating recommendations while preserving privacy.

That could lead to what he calls “generative advertising”.

Instead of advertisers identifying users who are already looking to buy something, Snapchat could start with the user, understand what interests them and then find businesses that match those emerging needs.

The model would effectively shift advertising from capturing existing demand to helping create incremental demand.

Spiegel acknowledged that making the shift will be difficult, but argued that it plays directly to Snapchat’s strengths and could deliver better results for both users and advertisers.

Creators are another major part of the advertising strategy.

Spiegel said a recent study found creator ads were played for 25 per cent longer and generated 16 per cent more active attention than standard branding ads. More than 300,000 creators are eligible to work with brands on Snapchat.

The company therefore plans to make collaboration between creators and businesses easier.

By the end of 2027, Spiegel wants businesses to see Snapchat not simply as an advertising platform, but as a sales channel.

That means making products easier to discover and share, while organically boosting relevant product content. Shopping, he suggested, could become a core Snapchat behaviour as creators increasingly produce visual, authentic product content.

Snap also plans to develop more advertising inventory. Spiegel specifically pointed to Spotlight, where the company wants to narrow the monetisation gap with Stories.

He argued that content has a broader role than simply generating advertising impressions because it gives users something to discuss and helps support the communication that keeps them coming back.

Messaging is particularly important. Spiegel said messaging is the strongest predictor of next-day retention, making communication between friends and family a key driver of both engagement and community growth.

While Snap wants to strengthen its core business, Spiegel is also preparing for a much bigger bet on computing.

That bet is SPECS, Snap’s smart glasses project, which the company plans to launch this year after 12 years of development.

Spiegel sees glasses, rather than smartphones or traditional computers, as the next major personal computing platform. AI, he argued, makes that vision significantly more powerful because glasses can understand both the wearer and the world around them and provide assistance without forcing people to look at a screen.

He sees a particularly large opportunity in workplaces, noting that most jobs happen away from desks.

SPECS could allow workers to keep their eyes up and hands free while still accessing computing capabilities. Spiegel also highlighted the ability to share experiences with friends, family and colleagues through glasses, keeping computing anchored in the physical world.

For Snap, the strategy is deliberately asymmetric. The company intends to devote most of its resources to strengthening Snapchat while using that stronger core business to fund the development of a new form of personal computing.

Spiegel ended his message with a warning that is as much about Snap’s culture as its technology strategy.

He argued that AI has made the time required to produce content almost negligible, but the amount of human attention required to consume that content has not changed.

That creates a premium on judgement, creativity and discipline, particularly as the internet becomes increasingly crowded with low-value AI-generated material.

For Snap, the opportunity is therefore not simply to use AI more aggressively. It is to use AI to reinforce the company’s bet on authentic relationships, real-world experiences and personalised recommendations.

The next decade will test whether that distinction can translate into the faster advertising growth and profitability Spiegel is targeting, while also giving Snap enough financial firepower to make SPECS its biggest bet yet.