Popular Social Media Platform Terminates Tons Of Workers
The popular social media platform SnapChat has announced its decision to terminate a significant number of its workers.
The hits keep on coming for the social media giant Snapchat. In the latest round of bad news, the company announced a massive layoff. Soon, over 20% of their staff will lose their jobs. That amounts to roughly 1,200 employees.
Snapchat’s enormous number of layoffs is part of a complete company-wide restructuring. Until recently, the social media company worked diligently to expand and broaden its horizons into more industries. But thanks to their dismal financial performance over the last year, something had to change.
About a year ago, the company was worth an impressive $130 billion. Unfortunately, their value dropped over the last year. And not by a small number. Snapchat‘s value now sits at under $20 billion. Investors and stakeholders are not happy with this news.
The sharp financial decline forced Snapchat to halt numerous projects, only making matters worse. One of those was a palm-sized drone, Pixie. The company designed the tiny drone to help users take selfies at more innovative angles. It was their latest attempt to gain a toehold in the hardware industry. They pulled Pixie off the market just four short months after it hit the online marketplace.
Before Pixie came Spectacles, sunglasses that featured a built-in camera. That project did not make it far at all, either. Apparently, Snapchat’s team failed to conduct thorough market research before plowing ahead with the project. The project was a major flop. Snapchat ended up sitting on so much inventory that they had to write down nearly $40 million.
So now, after multiple failed products, Snapchat decided to conduct a thorough overhaul. They will no longer focus on either large hardware projects or developing mobile games.
According to CEO Evan Spiegel, they will return to their roots. Marketing and advertising. He stated that the company had to “face the consequences of our lower revenue growth and adapt to the market environment.” Spiegel estimates that the workforce reduction will save $500 million in labor costs.
What Snapchat hopes to accomplish by pivoting its focus to heavy advertising sales remains unclear. They that recent privacy changes by Apple negatively impacted their advertising. That is due, in part, to the fact that the privacy changes made it more difficult for advertisers to track how people use their phones.
The changes did not just impact advertising revenue for Snapchat. All major social media companies were affected as well. Without the ability to track an individual’s use, ads become more generalized again, rather than targeted. And that shift has made advertisers wary about forking over tons of money to the various social media companies.
However, spending reduction on the part of advertisers is not just due to Apple’s privacy changes. Companies need to adjust due to record-breaking inflation drastically changing consumer spending habits. This shift means many companies may need to examine their marketing budgets to determine the best bang for their buck. Time will tell if Snapchat makes the cut or if companies view them as too risky to be worth it.
