Snap Blames Q3 Miss on iOS Ad-Tracking API Kinks; Stock Down

Snap Q3 rose 57% to just under $1.07 billion, $3 million below the lower end of July 22 guidance, said CEO Evan Spiegel on a call. The stock plunged 26.7% Friday, closing at $55.14. Thursday, Spiegel blamed the revenue shortfall in the quarter mostly on “disruptions” in Snap’s advertising business from “changes to iOS ad tracking that were broadly rolled out by Apple in June and July.” Though Snap previously anticipated “some degree of business disruption,” the new “Apple-provided measurement solution,” called SKAdNetwork (SKAN), did not “scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaign for iOS,” he said. The SKAN rollout was a “frustrating setback for us,” he said. Apple defines SKAN as an application programming interface that helps advertisers measure the success of app ad campaigns on the iOS platform. Snap saw “meaningful adoption” of SKAN in June and July, “when Apple pushed all of its users to update to the new version of iOS,” said Chief Business Officer Jeremi Gorman. Initial results “were generally aligned with prior industry-standard solutions, and we were among the first platforms to lean into this solution and push for widespread industry adoption,” she said. But as advertisers began testing SKAN, they unearthed “a variety of concerns about its limitations,” she said. “Every advertiser has their own unique, fine-tuned perspective on their optimal parameters to measure” return on investment “for their business, but SKAN requires them to use Apple's fixed definitions of advertiser success.” Advertisers that use SKAN can't measure impact of their “unique campaigns,” based on metrics like the time consumers take between “viewing an ad and taking an action, or the time spent viewing an ad,” Gorman said. “Real-time campaign and creative management is hindered by extended reporting delays, and advertisers are unable to target advertising based on whether or not people have already installed their app.” Snap is responding by speeding development of its own proprietary “first-party privacy-safe solutions,” called Advanced Conversions, to help advertisers “measure their campaigns effectively,” she said. Apple didn’t respond Friday to emailed requests for comment.