Snap leaning on AR to drive its India business, says cofounder Bobby Murphy

Last week, the parent entity of ephemeral messaging app Snapchat, missed Wall Street expectations for profit and sales. Daily active users (DAUs), however, grew by 18% annually to 332 million.

The company said then that Russia’s invasion of Ukraine and other economic headwinds would continue to hurt demand for advertising.

“There’s a lot going on in the world right now and these macroeconomic factors are playing a role in companies’ willingness and capacity to advertise…. We continue to be very optimistic about the way that our community is growing and the engagement that we see on our platform….,” Murphy said.

“We certainly believe that, while there may be short-term volatility in advertising, over the long-term, we remain very optimistic and think there’s a tremendous opportunity to continue growing our business,” he said.

Snapchat has registered a significant uptick in its user base in India, a market which the social media firm had not focussed on till a few years ago.

Discover the stories of your interest

In October last year, Evan Spiegel, the chief executive of Snap, told ET that the company had
reached 100 million people monthly (MAU) in the country, its second largest market after the United States.

Overall, Snapchat clocked 600 million monthly active users, worldwide.

The Santa Monica, California-based company attributes its growth in India to its augmented reality (AR) initiatives, as it looks to diversify its revenue pool beyond advertising.

Spiegel told in May that the company will look to port its
India playbook in outside geographies and may look at strategic investments in its AR push.

“We are really excited about the momentum and the growth in India, and I know that with our AR platform, in particular, it’s been amazing to see so much enthusiasm from the community there,” Murphy said.

At the annual Snap Partner Summit held on Thursday, the company announced a slew of products that further showcased its bullishness about AR.

Lens Cloud (infrastructure services for lenses), and the addition of Ray Tracing technology to its Lens Studio, which will improve the quality of output, were part of the new launches.

The app is popular among Gen Z (13 to 25-year-olds) for its quirky lenses, or special effects over an image to distort your appearance pre-capture.

Last year, Snap announced a long-term strategic partnership with Walmart-owned Flipkart to develop AR experiences for the platform for things like gaming.

For its Virtual Try On product, Snap has partnerships with beauty e-tailers Sugar Cosmetics and The Good Glamm Group. It says AR sees a 94% higher conversion rate when consumers interact with products using the technology in India.

“Given the kind of the momentum and enthusiasm we’ve seen in India around AR, all of these new services will hopefully represent exciting new prospects for lens creators, developers, and brands which are engaging with AR to make experiences more meaningful,” Murphy said.

The company’s revenue – at $1.06 billion in the first quarter of 2022 – is currently driven by advertising. Murphy said monetising its AR initiatives is still a work in progress.

ETtech

“AR can help end-customers make better decisions more quickly and in a more engaging way than traditional digital shopping…. We have a tonne of investment into proving the underlying technology, improving the experience towards more realism, and really working deeply on specific categories of commerce. It’s a long-term opportunity for us but we’re seeing some really great momentum already,” Murphy said.

Big tech companies like Meta (formerly Facebook) and Microsoft have made their ambitions clear to build for the metaverse.

The life-like virtual environment is an essential part of creating these virtual worlds.

Despite the buzz, Snap has stayed away from the metaverse bandwagon.

“We think AR is a much bigger opportunity than anything I’ve heard being described in a Metaverse context… There are aspects of AR that may involve a fully immersive experience,” Murphy said.