Snap unveiled AI-powered ad tools at the 2025 NewFronts, including “Smart Bidding” and “Smart Budget” for campaign optimization.
Snap’s strategy focuses on connecting with Gen Z and Millennials, leveraging unique audience access and music series.
Snap reported a 14% revenue increase in Q1 2025, with direct-response advertising making up 75% of ad income.
Snap is making a play for a larger slice of forward-thinking ad budgets by offering more intelligent tools and forging deeper connections with its core audience of Gen Z and Millennials.
New ad firepower: The company announced key updates at its 2025 NewFronts, most notably an expansion of its advertising platform with AI-powered tools. “Smart Bidding” and “Smart Budget” are built to automate campaign optimization and improve cost-effectiveness. The company also boosted its Sponsored Snaps product, rolling out First Snap for single-day chat feed takeovers, Web & App Auction Ads for precise delivery, Sponsored Snaps from Creators to harness influencer credibility, and a new live music series for brand tie-ins.
Performance first: Snap’s updated ad suite directly answers advertisers’ call for demonstrable returns and direct-response muscle. “When there is disruption—and there’s a lot of disruption happening now—both on the technology and macroeconomic front, we see that as an opportunity to remind smart advertisers that they can get better performance from us,” stated Ajit Mohan, Snap’s Chief Business Officer. Performance focus is vital as social media ad spend becomes more discerning, with marketers favoring channels that clearly deliver.
Youth connection: A central pillar of Snap’s strategy is providing distinct avenues to connect with its largely young user base, a demographic prized by advertisers yet often harder to reach elsewhere. Mohan pointed out that for U.S. users around 16, “nearly half of them are not on TikTok, more than half are not on YouTube,” stressing Snap’s unique audience access. Offerings like Sponsored Snaps in Chat, especially creator-fronted ones, and the “Under the Ghost” music series—tapping the 79% of U.S. Snapchatters keen on music—are crafted to cultivate this engagement.
The build-out: The announcements build upon Snap’s recent gains, including a 14% year-over-year revenue jump to $1.36 billion in Q1 2025, with DR advertising now forming 75% of its total ad income. Snap doubled its active advertiser roster since 2024, showing traction with performance-driven brands and SMBs. Mohan also subtly contrasted Snap with rivals facing more intense regulatory heat, highlighting Snap’s commitment to a safer platform.
Road ahead: The true test for Snap’s new tools will be their ability to produce concrete results and enrich user interaction without an intrusive feel, particularly within the personal confines of Chat. As Snap steers through what it described as “macroeconomic uncertainty” (a factor in withholding Q2 guidance), the uptake of its AI solutions and fresh ad formats will determine how sustained growth is possible.
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