Snap CEO Evan Spiegel just issued a new warning for the digital advertising industry, saying demand has 'slowed significantly' due to a slowing economy, inflation, and rising competition
, discussing the company's second quarter in a letter to investors, said demand for advertising"has slowed significantly" over the past three months.
Snap's stock fell 25% after hours. Shares of Facebook and Google, with businesses also almost entirely reliant on digital advertising, fell by 5% and 3%, respectively. To combat the reduction in ad spending, Spiegel said Snap is working to build out its direct-response advertising platform. A direct response ad is one where a user is prompted or asked to do something, like click a link, which gives advertisers a more immediate sense of whether and how well ads are working.
In addition to working to reinvigorate its ads business, Snap is clamping down further on hiring and expenses. Spiegel said the company intends to"substantially slow our rate of hiring, as well as the rate of operating expense growth."
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