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Grit · 3 min · Dec 15, 2025

Snap is building its ad business around smaller buyers

Snap shifted from roughly 500 large U.S. advertisers toward small and midsize buyers focused on conversions. Their spend grows quickly when ads deliver results; video ranking and engagement also make infrastructure costly.

Evan Spiegel

Co-founder & CEO, Snap Inc.

Co-founded Snapchat at Stanford and has led Snap as CEO since 2011, building Stories and the Specs AR glasses.

  • Joubin Mirzadegan, Host · Partner, Kleiner Perkins

    Took Palo Alto Networks' cloud business from $2M to $50M+ ARR in a year.

About this segment

Snap shifted from roughly 500 large U.S. advertisers toward small and midsize buyers focused on conversions. Their spend grows quickly when ads deliver results; video ranking and engagement also make infrastructure costly.

From “How Snap Plans to Win the AR Race | Evan Spiegel on Spectacles”, Dec 15, 2025. Watch the full episode

“They will increase their spend very rapidly if they see results on our platform.”
Evan Spiegelat 13:20 · Grit13:20

Takeaways

  1. Historically, about 500 large U.S. advertisers drove most revenue.
  2. Smaller buyers focus on lower-funnel results and can scale spend quickly.
  3. Video engagement and ranking add substantial infrastructure costs.

In this episode

Full episode
  1. 43:23Spiegel turned down the offer because Snap had a path alone3:00
  2. 22:05Snap raised its first round after running out of cash2:55
  3. 1:03:13AI leaders need to address public anxiety, not just opportunity3:51
  4. 2:14Snap sees utility and AI as the keys to AR glasses3:18

  5. 12:32Snap is building its ad business around smaller buyers3:16

  6. 52:21Spiegel used walkarounds to speed up a revenue reset2:17Up next
  7. 48:05Snap keeps its core design team to about a dozen people2:51
  8. 1:08:10Snap hires designers based on work, not credentials2:24

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

  1. 12:39

    of the other services that are out there today. Can you also make advertising a plus for your users? Well, they're going to have to see more ads or else you're going to try somewhere that you need to make more than $6 a year per person. For us, it's less about the number of ads. It's a lot more about the relevance of those ads, the diversity of those ads. And so actually the puzzle for us now is just bringing on more advertising demand. So Snaps advertising business historically was built around large customers. So, you know, let's call it 500 customers here in the United States that contributed the majority of Snaps revenue or really, really big businesses.

  2. 13:13

    We built the core of our business with those advertisers. Over the last couple of years, we've dramatically shifted our business to build that long tail, right? Of small and medium customers, which have really diversified our advertiser base. They are very focused on lower funnel goals. They will increase their spend very rapidly if they see results on our platform. And so most of the large players, Google, Meta, et cetera, the vast majority of their business is small and medium customers. And we've been on this journey going from the vast majority of our revenue being large customers here in the United States to shifting that business to a much longer tail of small and medium customers. We're not done with that journey yet, but that's been the focus If you can find advertisers who do stuff that feels to the users like content, that's kind of a double plus.

  3. 13:56

    I think that's certainly what we see. I mean, advertisers who work with creators, for example, to make, you know, Snapchat native contents, you know, certainly see higher conversion rates and that sort of thing. I think that's quite well understood in the industry at this point. One of the things that on the how do you make money question that I thought was really interesting that you addressed kind of head on in your letter.

  4. 14:13

    I actually thought you kind of addressed everything head on in your letter. You weren't shy about anything about the state of the business. One of the things that you were talking about was the margins question. And the stat that I read was there was a trillion snaps. Is it a billion? A billion snaps? Some crazy huge number last year or something like that. I actually think you're referring to an even smaller number than the total number of snaps, which is just the number of selfie snaps.

  5. 14:36

    This story sort of happened because Apple, I think, in one of their big announcements was saying, oh, you know, last year on all iPhones in the world, you know, people took more than 500 billion selfies. I saw that. I sent that to our team. I'm like, God, that seems very low. You know what I mean? I'm like shocked. Like, what is going on? You know, how many selfies are on Snapchat? And we found out very quickly it's much more than a trillion a year.

  6. 14:56

    Over a trillion selfies a year. Selfie snaps taken on Snapchat. And is this why the margins are? Because what do you do with all that? I mean, that's just a lot of information flowing through the system. That's a crazy amount of volume. Like, to Bing's point about 5,000 people, 5,000 people is nothing to handle that much. A trillion. That's insane. Dane, he might be the only media company that won't sell that information to LLMs.

  7. 15:19

    Yeah, yeah. To the point about infrastructure, the major drivers are really like the video engagement and that sort of thing, right? Just the volume of video content, people watching a ton of content all over the world. And then obviously all the infrastructure to rank all of that. We get so many submissions every day to Spotlight, to Stories, et cetera, to be able to personalize and understand all that content, personalize and rank it.

  8. 15:40

    For our community, it costs quite a bit of money. Crazy.