Snap announces tests of sponsored links in My AI, new ad products for Spotlight and Stories

After Snap's stock took a hit from its weak first-quarter earnings, the company today made its pitch to advertisers at IAB's NewFronts where it introduced new ad products and opportunities. Here, Snap's new President of Americas Rob Wilk, previously Microsoft's head of Advertising, and Chief Creative Officer Colleen DeCourcy, spoke about a test that allowed Snap partners to leverage its new AI feature, My AI, to place sponsored links in front of users. Snap also announced new ad slots, including the option to reserve the first video ad seen in Snapchat's Friend Stories and the ability to advertise within its TikTok-like Spotlight feature.

The announcements come at a key time for Snap's ad business, which saw its sales fall for the first time as a public company, despite a 15% year-over-year increase in Snapchat users to 383 million.

The tech industry's first-quarter results made clear that the advertising rebound that had boosted Meta during Q1 was not yet benefiting the wider social app ecosystem. Snap wasn't alone in feeling those impacts -- Google's YouTube business also saw its ad revenue decline by nearly 3% in the quarter. By opening up new ad products to marketers, Snap has the opportunity to drive revenue increases as it finds more places to insert ads into its mobile app.

While many of the ad slots Snap announced today were more traditional placements, one of its announcements stood out.

At the event, the company talked about how Snap could use its new AI feature to put sponsored links in front of users -- something Snap CEO Evan Spiegel had teased during earnings.

My AI, which just rolled out to the wider Snapchat user base last month, can now suggest Lenses, Places from Snap Map and, soon, will be able to send a generative Snap back to Snapchat+ subscribers, in addition to having text-based conversations with users.

Today, the company confirmed it has begun testing sponsored links in conversations with My AI that would connect users with partners relevant to their conversation. For instance, if a Snapchat user asked where to have dinner, My AI could return a link sponsored by a local restaurant or a food delivery app. If a user was talking about a weekend trip, My AI could return a sponsored link from an airline or hotel. Or if a user was talking about a video game, users might receive a link to a similar game from a local retailer.

Image Credits: Snap

Snap says it's still in an early experimental stage with this feature and wants to make sponsored links as useful as possible.

It also notes that the learnings from AI could introduce mobile video powered by conversational intent to Snapchat users for the first time and noted how users' conversations with the AI would help Snap to serve more relevant content across its app, including in areas like Stories and Spotlight. In other words, it sounds like what users talk to the AI about could then change the experience of what they see elsewhere in the app.

To aid with this, Snap informs users that it's saving their AI conversations until the user manually deletes them.

It's worth pointing out how quickly Snap is running with the AI feature's addition. The company just over a month ago said it was still seeking qualified AI experts to join its Safety Advisory Board. It also launched the AI product to global users before introducing parental controls -- though it says those are coming. Meanwhile, Snapchat users have been panning the AI with one-star reviews amid complaints that the feature can't be removed from their Chat tab without paying for a subscription.

Other Snap announcements today involved Spotlight, its TikTok clone, which launched in 2020. Snapchat began testing ads within the product a year ago and, during last week's earnings, Spiegel said Spotlight now reaches 350 million monthly active users -- a figure that's up 170% year-over-year.

Now, the company is opening up Spotlight to global advertisers, it said at NewFronts.

Spotlight ads will initially be served as automatic placements with the service and advertisers will be able to manage those via the Snapchat Ads Manager. Of course, there's a risk with buying ad slots next to any user-generated content, but Snap says it moderates Spotlight content before it reaches a wider audience, which reduces the chance that marketers' content would appear alongside hate speech or any harmful content.

In addition, Snap introduced a new takeover ad product called "First Story," which lets advertisers reserve the first Snap Ad (the video ad slot between Friend Stories), that users would see. The company compared the product, which it said was in high demand, to existing offerings like First Commercial and First Lens, which also let advertisers reserve the first spot in other parts of Snapchat's app. The potential of being first in Friend Stories means a marketer is more likely to reach users before they exit. In the U.S., Snap says the potential daily reach is over 50 million.

Image Credits: Snap

The First Story ad placements are launching today globally, and Warner Bros. is the first client. It will be using the ad slot for marketing the upcoming feature, "The Flash."

The company also today announced it's making it easier for brands to work with Snap creators through Snap Star Collab Studio in the U.S., its service that helps brands source, partner and drive results with Snap Stars, as it calls its top creators and other public figures on the app. The new Studio will aid partnerships by connecting brands with preferred production partners -- Studio71, Beeline by Brat TV, Influential and Whalar -- to create and execute their sponsored Stories and creative.

Image Credits: Snap

Over the course of the year, Snap will also expand its API and introduce additional tools for paid amplification, which will help brands' creative reach more users.

Snap also announced a range of new content partnerships at today's event, including plans to work with the Women's World Cup, which joins its existing partners, NFL, NBA and WNBA in the sports realm. Women's World Cup will bring exclusive content to Snapchat's Stories, Spotlight and Camera for its upcoming tournament, the company says.

"Snapchat is all about real relationships, and where over 750 million people come every month to build connections and have fun with friends, families and their favorite creators," Wilk said. "We’re thrilled to share at NewFronts how those real relationships drive real influence for brands as we announce new innovations and features across Stories, Spotlight, Creators, My AI and more.”