Understanding Snapchat’s advertising potential
A month ago, Snapchat's Indian subsidiary, Snap Camera India, crossed Rs 100 crore in revenue in fiscal year 2024, for the first time. The company reported operating revenue of Rs. 101.3 crore for the year ending March 2024, with a 28.5% increase from the previous year's Rs. 78.8 crore.
These numbers tell only part of the story of a platform that now accounts for over 200 million monthly active users in India. With 48% of its Indian users aged between 18 and 24, the platform has been positioning itself as the platform of choice for reaching younger demographics.
What makes these achievements noteworthy is how they contradict Snapchat's initial stance toward the Indian market. In 2017, reports emerged that CEO Evan Spiegel had allegedly dismissed expansion into India, reportedly claiming the country was "too poor" for Snapchat's premium offerings, and Snap Inc. officially denied these comments.
The backlash was swift and severe, with many Indian users uninstalling the app and downrating it on app stores. Yet just a few years later, India has become central to Snapchat's global growth trajectory.
Today, Indian developers publish more AR lenses on Snapchat than creators from any other country globally. As Bobby Murphy, Chief Technology Officer at Snap Inc., acknowledged at the company's second annual India AR Day event in Mumbai, "Indian developers are at the forefront of innovation, bringing engaging and creative experiences to life. In fact, among all countries, the highest number of lenses published on Snapchat comes from India."
Advertising behind the growth
The platform's revenue surge can be attributed to its advertising business, which has seen projected growth of 37% in FY24. This performance stems from Snapchat's advertising formats, each designed to leverage the platform's unique characteristics. Some of these formats include:
AR-driven Lenses & Filters
According to Manika Juneja, Managing Partner at Dentsu Creative Isobar, "AR-driven Lenses and Filters remain a standout for engagement and brand interaction." These experiences have become the platform's signature offering, allowing brands to create interactive campaigns that leverage the platform's technological capabilities.
According to data, over 70% of new Snapchat users engage with AR during their first day on the app. Lens usage in terms of posted Snaps increased by 49% year-over-year in Q4.
Sponsored Snaps
Recently introduced to the Indian market, Sponsored Snaps place full-screen vertical video messages directly into users' chat inboxes. Reliance Retail's e-commerce platform AJIO became the inaugural Indian partner for this format, aiming to connect with Snapchat's young, digitally native audience.
Shradha Agarwal, Co-Founder and Global CEO of Grapes Worldwide, explains, "Sponsored Snaps enables video ad formats for facilitating brand awareness along with consideration and conversion with a single placement."
This format allows advertisers to engage prospective customers across the entire marketing funnel within a single ad placement.
Juneja notes that E-commerce, D2C, and QSR brands targeting Gen Z can benefit from the advertising format.
AJIO is not the only brand to utilise the format. Oreo collaborated with Post Malone for a campaign and utilised Sponsored Snaps to show the artist mining ‘mountainous Oreos’ on an alien landscape. It reportedly resonated with Snapchat's audience, 79% of whom cite music as a passion point according to Snap Inc.'s internal data. Additionally, this feature has been utilised during movie promotions for Wicked and Moana 2.
AI Video Lenses
Combining augmented reality with generative AI, this new lens format creates immersive experiences. Though currently limited to Platinum subscribers, this feature allows for three options, including the fox lens, a raccoon lens and a flower lens. These Lenses are powered by its in-house built generative video model.
While Snapchat offers multiple advertising formats, what makes it different from other social platforms?
Understanding Snapchat's value proposition
Juneja offers a vivid comparison. She says, "Snapchat is a burst of cotton candy, quick, fun, and disappears fast, making it great for snappy engagement and AR-driven buzz, while the platform sells itself as the go-to for Gen Z spontaneity.”
On the other hand, she believes Instagram is built for sharing, ideal for influencer-driven engagement and shoppable moments, while YouTube is good for both long and short form storytelling and high-impact branding.
This distinctive character makes Snapchat particularly valuable for brands seeking to connect with younger audiences. According to Dentsu's latest digital advertising report, social media contributes 29% to digital ad spending in India and is projected to grow at a 20.22% CAGR.
One of its main attractions is the platform’s push to help creators monetise themselves. It has been strengthening its creator ecosystem, with creator numbers growing approximately 50% year-over-year in Q3 2024. Research conducted by OMG across five markets found that creator content holds viewers' attention 12% longer than standard ads, with 8% longer playtime.
When brands combine creator content with regular paid ads, they reportedly experience significant improvements in ad recall and unaided brand awareness. As Snap's research claims, "When consumers were exposed to a Creator ad followed by a product ad, brands came off as more trustworthy compared to when they were only exposed to product ads."
Challenges and limitations
Despite its growth, Snapchat faces significant challenges in the Indian advertising market. Juneja candidly assesses the platform's performance metrics, saying that Snapchat's immersive experience drives strong engagement and impressive swipe-up rates. However, when it comes to direct conversions, Meta platforms continue to lead the space.
She identifies several areas requiring improvement. She continues, "To unlock its full potential, stronger attribution models, deeper audience insights, and better e-commerce integrations are required on the platform. I will be excited to see these getting introduced for the advertisers of the country."
The platform's expenses have also risen substantially, with total expenditure jumping 28.7% to Rs. 88.3 crore in FY24. Advertising and promotional expenses surged 37% to Rs. 14.8 crore, while miscellaneous expenses more than doubled, increasing 134.3% to Rs. 17.1 crore.
Despite these challenges, the platform's core strength lies in its appeal to younger users. Juneja points out that Snapchat is where the next generation of consumers is forming brand preferences.
“This audience may not have the highest spending power today, but they dictate trends, influence household purchases, and drive cultural conversations.”
Brands that engage them now are investing in future market leadership rather than just short-term conversions, according to her.
Agarwal notes, "With the strategy to tap younger audiences and Gen Z cohorts, Snapchat is among the fastest-growing social media platforms in the country."
What brands should focus on
For marketers looking to leverage Snapchat effectively, Juneja mentions that they need to think of native, immersive, and interactive content, not just repurpose content from other platforms.
“AR, creator-led storytelling, and dynamic ad formats are key to capturing Gen Z's attention."
She emphasises that building content for the right TG is the key to unlocking the potential of the platform.
Snapchat, for its part, has doubled the size of its team in the country over the past year. In February 2024, the company elevated Asia Pacific (APAC) president Ajit Mohan to the role of Chief Business Officer (CBO), further signalling India's importance to Snapchat's global strategy.
The platform is also strengthening its agency relationships through a new two-tier structure for its Agency Partner Program, aiming to bring more independent media agencies and performance-focused shops into its ecosystem. With active advertisers on the platform more than doubling in Q4 2024, it is aiming to position itself as a mainstream media partner rather than merely a niche channel for reaching Gen Z.
As Agarwal summarises, "With the user base of the platform growing rapidly within the country, brands are leveraging it to the fullest to further enhance their interaction with the audience aimed at fostering a more meaningful and deeper connection with them."
While challenges remain in terms of conversion metrics and attribution, the platform's strong user growth and engagement statistics suggest it has established a solid foundation for future expansion.
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