Snap Layoffs: Content Division Affected the Most as it Consolidates Teams to Venice, CA

Snap Layoffs
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Snap Inc. (NYSE:SNAP) laid off about two dozen employees in eight different teams on Thursday. Most of these Snap layoffs are in the content division, which works with more than 70 publishing partners, like BuzzFeed, Inc. and NBC, to make original videos for its social media platform.

The “Snapchat” parent company said that the remaining employees in the content division will be moved to the company’s office in Venice, California. This includes employees from the London and New York offices.

The Snap job cuts may not come as a surprise to some, because the technology and social media company has been struggling with growth for a while. Competing with Facebook Inc (NASDAQ:FB) has turned out to be more difficult than expected, and Snap’s management has not been able to come up with any noticeable innovation following its much-hyped initial public offering.

Snap Inc had grabbed headlines as it kept gaining the attention of young users who flocked to Snapchat’s unique platform and filters. However, this edge was short-lived, since Facebook ended up copying most of these features and improving its own services, like “Instagram.”

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Ad Buyers Prefer Instagram Over Snap

Snap Inc has been losing market share to its arch-rival Instagram, which continues to be the favorite of ad buyers.

Earlier this month, Snap shares took a hit following an analyst report on the preferences of ad buyers. According to the survey, 96% of respondents said they would prefer buying ads on Instagram than on Snapchat. This was due to the respondents’ poor ranking of Snapchat on important metrics like user targeting, campaign measurement, and return on investment.

Although Snap seems to be committed to improving content quality and user growth, the results have been slow, which has been testing the patience of investors. The recently introduced app redesign has not been able to strengthen the confidence of its business partners.

Snap Laid Off Employees from Hardware and Recruiting Divisions in 2017

This is not the first time that the Snapchat parent company has laid off employees. Last September, about a dozen employees from its hardware division were relieved of their duties. In October, the company laid off 18 employees from its recruitment division, and had indicated that hiring would slow down in 2018.

Snap Inc. had made its foray into hardware with the introduction of “Spectacles,” which failed to take off after creating an initial frenzy. The lower-than-expected performance of these video-recording sunglasses has been a setback to the company.

Investors were disappointed when Snap announced its third-quarter results in November 2017 and said that the company had missed its revenue expectations by a huge margin. Snap shares fell by almost 16%, given the lower-than-expected daily active users and average revenue per user.

Unless Snap Inc. comes up with some major initiatives to differentiate itself from Facebook and improve its user engagement, more Snap layoffs in 2018 can be expected.

 

Sources:

Exclusive: Snap Lays Off Two Dozen Employees,” Cheddar, January 18, 2018.

Snap Inc. lays off at least two dozen amid slowed user growth and engagement,” TechCrunch, January
18, 2018.

Snap gets downgraded because ad buyers prefer Instagram,” Business Insider Nordic, January 4, 2018.

Snapchat share price craters on weak revenue and user growth in Q3 2017,” TechCrunch, November 7, 2017.

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