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Why Snapchat Failed While Meta Soared

3D graphic by Alexander Shatov via Unsplash

Why Snapchat Failed While Meta Soared

By Movieguide® Contributor

While Snap and Meta faced similar problems in 2021, the companies have had different responses, causing Snapchat to falter while Meta has only grown stronger.

Meta and Snap – Snapchat’s parent company – were climbing in value in 2021 before a combination of new iOS privacy features and TikTok led both companies to tank. However, Meta has since regained its standing, while Snap has continued to struggle.

Both companies were at the top of the social media food chain in 2021, but TikTok has since usurped them. To combat the new competitor, both Snap and Meta have introduced a short-form video platform of their own.

Snap created Spotlight, allowing users to share short videos with friends and strangers across the platform. Meta created Instagram Reels to share 15-second videos across its site.

While both additions were essentially the same product – and a replication of TikTok – Reels has found success, contributing to Meta’s return to form, while Spotlight remains largely unused. The difference comes from Reels introducing a relatively new feature to the platform, while Spotlight simply added another place to put short videos, something users on the site were already used to.

Along with stronger competition from TikTok, the two companies found difficulties with new iOS rules about advertising and privacy, which hurt Meta and Snap’s core business. At the end of 2021, Apple updated its privacy to make it harder for third-party apps to offer personalized ads. Thus, social media apps struggled to target specific users.

Since then, Meta has created a more advanced AI algorithm that allows it to continue serving personalized ads on its apps using more data directly from Apple. This has also allowed the company to rebound and even surpass where it was in 2021. Meanwhile, Snap attempted to roll out a more effective ad system based on first-party data but could not find nearly as much success.

The two companies are now heading in vastly different directions as Meta has recaptured the popularity and power that it enjoyed in 2021. Snap, however, has struggled to maintain any relevance. The impact of these differences has been felt recently as Meta continues to pour money into its non-social media projects, such as the metaverse, while Snap’s other ventures have been shut down.

Last year, Snap cut a fifth of its workforce as it shut down its games and streaming projects. It has since laid off an additional 10% of its workers to start 2024. The gap between Snap and Meta will only continue to grow as these two companies head in very different directions.

Movieguide® previously reported:

Social media companies’ fourth quarter earnings results showed a continued decrease in digital ad revenue. 

Snapchat parent company, Snap, reported a flat year-over-year revenue growth. Their stocks have dropped 15%, and they expect a 10% revenue drop in the current quarter. 

“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community,” Snap CEO Evan Spiegel said.

Meta, Facebook and Instagram parent company, expected a similar drop, and while revenue declined 4% in Q4, this result was better than what Wall Street initially anticipated. The following day, stocks shot up 23%, making it the company’s best day in over a decade.