by Krystal Scanlon * 7 February 2025 * Snap finally jumps on the AI-powered advertising bandwagon. It took a long time, but Snap has finally followed in the footsteps of Google and Facebook, who have been launching similar tools since 2021.
This move is aimed at increasing its appeal to smaller advertisers, which it has been pursuing for years. Snap’s CEO Evan Spiegel noted on the platform’s most recent earnings call (Feb. 4) that small to medium-sized business (SMBs), which had been a major focus area for the Snap team over the last 12 months, were the “largest contributing to ad revenues growth in 2024.” He said that the company achieved $1.56 billion in the fourth quarter of 2024 and $5.36 billion total for the year. However, he did not share any specific breakdowns of how much of these numbers were due to their SMB advertiser.
Speaking to analysts, Snap’s CFO Derek Andersen revealed that the team is working on a “pretty robust roadmap” and enhancements for SMB clients this year. He also teased that they will be testing a key product in the first quarter of 2025: a smart budget optimization feature.
According to Andersen, the product automatically adjusts budgets for all assets in order to achieve the best results for advertisers — standard fare when it comes AI-driven advertising. Snap’s version isn’t as powerful as its competitors’.
For example, Google’s Performance Max or Meta’s Advantage+ give platforms a lot of control over their campaigns. It’s the ultimate “set-it-and-forget-it” strategy –advertisers input their assets, and the tool decides what to do with it all. Snap’s smart budget feature is so new that little is known about its nuances. Snap’s spokesperson said that the feature was “comparable” with other products, even though it is not the same.
Shamsul Chowdhury is evp paid-social at Jellyfish. She said that they have [Snap has] hired some new leadership members who are close to their product team and have acknowledged that they are behind in AI-based campaigns. “We do not have any SMB customers, but we will be eager to try this feature out on our clients if the opportunity arises.” Andersen said on the earnings call that: “… we are looking at some of our investments in the year ahead. Not just investments in product, but also resources to help scale the SMB sector,” he added.
One of these releases, launched in late 2024, is personalized templates, a automatic campaign setup tool which streamlines ad creating, as a means to simplify onboarding for small businesses.
Platforms are chasing smaller advertisers’ dollars for years. Debra Aho, founder and chief analyst of Sonata Insights and founder of Sonata Insights, said that Meta and Google are responsible for a large part of the success in this category.
She said that anything Snap can do to help these businesses buy advertising on its platform will go a very long way to helping it increase revenue.
A Snap spokesperson said that after this story was published: “We’re encouraged with the strong momentum of our improved ad platforms – driven by 14% growth year-over-year in our Direct Response Business – and helping partners drive meaningful business results.” We continue to focus on accelerating and diversified revenue growth and expanding our AI-powered advertising automation suite. Smart Budget Optimization beta testing will begin late Q1”
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