Snap Brings Shoppable AR Feature To Encourage Advertising

Snap (NYSE:SNAP) is introducing ShoppableAR (augmented reality) lens on its messaging application, Snapchat that will enable advertisers to sell products directly through the filler.

Shoppable Lenses, which is much like the app’s Sponsored Lenses launched in 2015, has an additional button, which when tapped will allow users to visit a website, buy a product, watch videos or install an app, all within the platform. Notably, Clairol, Adidas (DE:ADSGN), STX Entertainment and King are the first four brands to debut the feature.

The company’s strategy is widely seen as an effort to increase user engagement and thereby drive the time spent on the platform. According to the company, 70 million users use the Lenses feature every day for around three minutes.

Snap’s efforts to lure advertisers are evident from the fact that it is not charging extra for this latest offering. Moreover, we believe this new feature will also help the company obtain more information regarding the products that users are willing to buy or showing interest in, in order to target advertisements.

Focus on Advertisements

Advertising is the primary source of revenues for Snap and therefore increasing its effectiveness is the company’s priority. In order to bring more advertisers, Snap is creating innovative products to attract/retain users as user growth remains the key to draw them to the platform.

Snap aims to be “a one-stop shop for those that continue to invest” in its platform. The company is therefore beefing up investments to enhance its product suite, which includes Snap Ads and Sponsored Creative Tools like Sponsored Lenses and Sponsored Geofilters.

Moreover, Snapchat’s new conversion tracking tool, Snap Pixel is also gaining traction. The tool helps advertisers to measure traffic growth on their websites.

Snap’s new ad format Promoted Stories also offers good opportunity to the company by helping advertising partners spend more time with audiences.

On the last conference call, the company mentioned that it has allies with 19 third-party measurement partners in order to understand the impact of the ad campaigns on the platform.

We believe Snap’s focus to bring more effective advertising tools will help it withstand stiff competition in the digital ad market from the likes of Alphabet (NASDAQ:GOOGL) , Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) . Per a latest survey by Digiday, 42% of the respondents said that Snapchat was the most difficult platform for digital advertisements.

Moreover, bringing more of this type of innovative features is a key step for a company, which is entirely dependent on ad revenues.

Currently, Snap carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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