Snap Inc., the maker of the Snapchat app, is testing ways its popular new AI chatbot can boost the company’s advertising business.
More than 150 million people — about 20% of Snapchat’s monthly users — have sent 10 billion messages to the chatbot, called My AI, since its introduction in late February, the company said Thursday. Users asked about everything from skincare recommendations to details about the latest sports car.
My AI, which calls itself “Snapchat’s Virtual Friend,” has already helped Snap diversify its revenue streams in a way that many social media companies have struggled to do: through paid subscriptions. After the feature first rolled out to paying users of the app, Snap’s total number of subscribers grew to more than 3 million in April.
In what could be an even more lucrative revenue boost, Snap is using what it’s learned from chatbot interactions to refine its advertising business, which provides the majority of the company’s revenue. Snap’s advertising struggled, and the company reported its first-ever sales decline in the first quarter. My AI was opened to all Snapchat users two months ago, and the influx of messages could help Snap improve the way it personalizes ads.
Snap and its peers are still recovering from a change Apple Inc. made to its privacy policies two years ago that drastically reduced the ability to track ads and target specific audiences on apps. This has forced social media companies to come up with new ways to learn more about individual users’ interests based on their activity in the app.
Snapchat’s core feature is its private person-to-person messaging, giving the company little insight into a user’s activities. Instead, Snap primarily gleaned clues from videos a person viewed in the app’s publicly posted Stories or Spotlight video stream. Now Snap is starting to use conversations with My AI to better target commercial messages based on user interests.
The Santa Monica, Calif.-based company has also begun a test putting sponsored links from advertisers into conversations with My AI. This could possibly mean including a link to a product in a conversation about clothing or beauty, topics that have already generated more than 28 million discussions with My AI among users in the United States, India, France and India. Britain, the company said.
Welcome to the era of chatbots
Businesses across industries have been excited about the prospect of generative AI ever since OpenAI launched its ChatGPT chatbot. Many of the hottest consumer uses have come in the form of a chatbot, which converses in a human-sounding tone and spits out answers faster than a person can search for them on the internet. Alphabet Inc.’s Google on Wednesday announced new generative AI tools for shopping, helping consumers find products, as well as travel destinations.
Outside of ad activity, My AI conversations also help Snap refine its fundamental ranking models – the algorithms used to show a given user the app’s most personalized content and goals, as well as filters photo and video. The goal is to entice users to spend more time on the app.
“We see huge potential for My AI to improve the relevance of the content we provide to Snapchatters across the service, whether that means bringing up the right creator, AR experience or mobile video from our advertising partners,” Rob Wilk , president of Snap for the Americas, said in an email.
Marketers are more likely to spend on delivering digital ads in front of users they know might be interested in their products. Snap has already positioned My AI as a resource for asking for recommendations while letting users know with a pop-up before chatting that conversations can be used to personalize their Snapchat experience.
Conversations have become specific to particular areas of interest and brands. Take cars, which have been talked about in more than 65 million chats, nearly 8 million of which relate to specific brands, including BMW, Kia, Ford and Volkswagen. Or food, where McDonald’s has been the subject of 5 million discussions with My AI.
By Alex Barinka
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