Snap, the owner of the social network Snapchat, announced its intention to reduce its workforce by 10% in 2024. This decision is due to the company’s desire to reduce the negative consequences caused by the decline in the online advertising market. In 2022, Snap has already cut 20% of its employees, and in 2023, its workforce has decreased by another 3%. As of early 2023, Snap employed 5,300 people.
The company is working hard to expand beyond its core product, which is Snapchat. Augmented reality glasses never gained widespread adoption, and other hardware solutions, such as a selfie drone, were discontinued shortly after launch. Even software products inside Snap, such as a TikTok-style short video platform called Snaplight and paid subscription service Snapchat Plus, are not growing as quickly as the company had hoped.
In recent years, Snap has faced the same challenges as other technology and media companies: a shrinking advertising market and problems with targeted advertising due to Apple’s policy change to prohibit tracking user activity on iOS devices. Snap’s revenue rose in the third quarter of 2023, but that came after declining in the previous two quarters. The company is due to release fourth-quarter 2023 earnings this week.
As for layoffs, the company did not specify which divisions would be affected. Snap said the staff reductions are intended to “best prepare the business for the implementation of the highest priority tasks” According to reports, Snap will spend up to $75 million on compensation as part of the next wave of layoffs. The company’s 2024 goals include plans to increase daily users by 17%, increase advertising revenue by 20%, and double Snapchat Plus subscribers (currently around 7 million).