Snap is putting faster advertising revenue growth at the center of its business strategy, with CEO Evan Spiegel outlining plans to use AI, creator partnerships and commerce features to improve how Snapchat identifies consumer intent and connects users with advertisers.
In a letter to employees marking Snap’s 15th anniversary, Spiegel said advertising revenue growth will be the company’s top business priority after user safety over the next three to five years. The focus comes as Snap looks to improve profitability while continuing to invest in its Specs augmented reality glasses.
Snapchat reached 971 million monthly active users and 493 million daily active users in the second quarter. However, Snap’s advertising revenue grew 9% year over year in its most recent quarter, a rate Spiegel acknowledged was slower than that of many competitors.
Advertising remains Snapchat’s largest revenue source and is expected to play a major role in determining the company’s profitability. Spiegel said the difference between compounding advertising revenue at 15% annually rather than 5% would translate into substantially more net income because much of Snap’s incremental ad revenue flows to the bottom line.
Snap has never recorded a full-year GAAP net profit, though Spiegel cited analyst estimates suggesting the company could reach that milestone for the first time in 2027 as revenue growth outpaces its cost base.
The company has been rebuilding and diversifying its advertising business following Apple’s platform policy changes in 2022. According to Spiegel, ad impressions and conversions have increased while CPMs have declined, and small and medium-sized businesses now account for more than 30% of Snap’s advertising revenue.
The next stage of that strategy is increasingly tied to artificial intelligence.
Spiegel argued that Snapchat has access to behavioral signals that differ from the explicit commercial intent commonly used across digital advertising. Users take photos, communicate privately with friends, explore Snap Map and seek recommendations about places, activities and products.
Multimodal AI models could allow Snap to interpret sequences of those interactions and develop a broader understanding of what a user may want to do or purchase next.
That would represent a shift from advertising models primarily built around existing intent signals such as product searches, website visits and additions to shopping carts. Instead of starting with an advertiser and identifying users most likely to convert, Snap wants to start with individual Snapchatters, predict what they may be interested in and then match those users with relevant businesses.
Spiegel described this approach as “generative advertising,” with AI potentially helping Snapchat identify demand before users explicitly begin searching for a product.
The strategy would place AI deeper into Snap’s advertising infrastructure as the company attempts to generate incremental demand rather than compete solely for users who have already demonstrated purchase intent.
Creators are expected to form another part of the expansion. Snap said creator ads were played 25% longer and generated 16% more active attention than standard branding ads in a recent study.
More than 300,000 creators are currently eligible to work with brands on Snapchat. Snap plans to continue developing tools that connect creators with advertisers as it seeks to make creator-led content a larger component of its commercial ecosystem.
Commerce is also becoming a more explicit objective. Spiegel said that by the end of 2027, he wants businesses to view Snapchat as a sales channel rather than only an advertising platform.
To support that goal, Snap plans to make products easier to discover and share within Snapchat while organically increasing the distribution of product-related content when it is relevant to users. The company sees creator-generated visual content as one route for turning shopping into a more regular behavior on the platform.
Snap is also looking at its available advertising inventory. The company plans to continue expanding Spotlight while narrowing the difference in monetization rates between Spotlight and Stories, creating additional higher-value inventory that can be sold to advertisers over time.
At the same time, private communication remains central to Snap’s user growth strategy. Spiegel said messaging is the strongest predictor of next-day retention on Snapchat, connecting the company’s advertising ambitions with its broader focus on communication between friends and family.
The advertising push comes as Snap continues to diversify beyond ads through subscriptions, in-app purchases and its upcoming Specs hardware. The company is launching Specs this year after more than a decade of development, with AI positioned as a central part of its vision for augmented reality computing.
Spiegel also addressed the broader impact of generative AI on content creation, arguing that while AI has dramatically reduced the time required to produce content, it has not reduced the amount of time users need to consume it. He warned internally against using AI simply to generate greater volumes of material, emphasizing human judgment as the volume of AI-generated content increases online.
For Snap’s advertising business, however, AI is being positioned as more than a content-generation tool. The company is looking to multimodal models to interpret user behavior, predict emerging intent and connect those signals with advertising and commerce opportunities.
With ad revenue growth now designated as a company-wide priority, Snap’s strategy increasingly links AI-based recommendation, creator advertising, product discovery and commerce as it works to turn Snapchat’s user interactions into a larger performance advertising and sales business.
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