Snap targets small businesses with new AI advertising tool

Snap is launching a new AI-powered advertising tool aimed at small and medium-sized businesses (SMBs), marking its entry into AI-driven advertising solutions following similar moves by major tech platforms.

Market performance and strategic focus: Snap’s focus on SMBs has yielded significant results, with the company reporting strong financial performance in 2024.

• The company achieved revenue of $1.56 billion in Q4 2024 and $5.36 billion for the full year
• SMBs were identified as the largest contributor to ad revenue growth in 2024
• CEO Evan Spiegel highlighted SMBs as a key focus area during the company’s latest earnings call

New product rollout: Snap’s new smart budget optimization feature represents its first major step into AI-powered advertising tools.

• The feature automatically adjusts campaign budgets across assets to optimize advertising results
• While similar to existing tools like Google’s Performance Max and Meta’s Advantage+, Snap’s offering appears to be less comprehensive
• A company spokesperson described the feature as “comparable” to competitors’ tools, though not equivalent

Current market position: Snap acknowledges its relatively late entry into the AI-powered advertising space.

• New leadership hires close to the product team have recognized the company’s delayed entry compared to competitors
• The platform launched personalized templates in late 2024 to simplify ad creation for SMBs
• Snap is investing in additional resources specifically targeted at scaling its SMB segment

Industry perspective: Market experts view Snap’s SMB focus as strategically important for future growth.

• Industry analysts note that major platforms like Meta and Google have built substantial success through SMB advertising
• Jellyfish’s EVP of paid social, Shamsul Chowdhury, expressed interest in testing the new features despite the platform’s current limitations
• Sonata Insights founder Debra Aho Williamson emphasized the importance of making advertising more accessible to smaller businesses

Strategic implications: While Snap’s entry into AI-powered advertising tools marks an important step forward, the platform faces significant challenges in catching up to established competitors who have been developing these capabilities since 2021.