Advertisers Explain What Snap Must do to Squeeze More Money From Each User and Match Facebook

Wall Street is not happy with Snap right now. The stock plunged 20 percent after its first-ever earnings report Wednesday missed expectations.

With Snap’s ad revenue projected by eMarketer to reach $1 billion this year, it can still be a strong digital advertising presence. The company only gets an average of 90 cents in revenue per user. For comparison, Facebook gets $4.23 per user as of this last quarter.

Here’s what advertisers tell CNBC it needs to do:

Get advertisers to use and understand it

“Advertisers don’t use it personally,” said Matt Britton, CEO of marketing firm Crowdtap.

“Facebook took off when brand managers were using it to share pictures of Little League games with each other. They really need to educate advertisers as users, as consumers.”

They also need to work on teaching advertisers what kind of ads work best.

Right now there’s a “high barrier” to create ads, mostly because advertisers usually have to create something bespoke, which means higher costs, said Kieley Taylor, head of paid social for media agency Group M.

More data could help.

“Brands know they need to be able to tell stories in a different way, but they need to have a better understanding of [how to use] targeting and price points,” she said.

Build its core youth audience

Competitor Instagram Stories is already more popular despite only launching in August, but Snap may be able to remain relevant if it keeps its in-demand younger audience.

“The core audience from Snap is the reason why advertisers are there,” said Chris Paradysz, co-CEO of PMX Agency.

Digital advertisers will be interested if Snapchat can slow its attrition rate and keep younger users engaged.

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