Snapchat Rolls Out GenAI Selfie Feature, Dreams

Hoping to cement its lead in the artificial intelligence-powered platform race, Snapchat launched its latest generative AI selfie feature, Dreams, now available in Australia and New Zealand and expected in other markets over the next few weeks.

The AI-powered feature lets people use their own faces to create up to eight generated AI selfies, placing them in an imaginative background, like a royal in the Renaissance era or a mermaid in a deep seascape.

“Snap’s creative focus of generative AI is definitely leading ahead of features and capabilities that have been announced and rolled out by other platforms such as TikTok and Pinterest,” said Katya Constantine, CEO of DTC agency DigiShopGirl.

Snapchat launched its AI-powered chatbot, My AI, in May. Since then, My AI has received over 10 billion messages from 150 million people, the company said. These conversations range from asking for cosmetic recommendations for skincare to chats about apparel and cars. Although competitors like TikTok have been testing their own AI-driven chatbots, and Facebook and Instagram have similar aspirations, Snap’s new offering that comes with in-app purchases could mitigate ad revenue challenges.

“Snap has moved quickly into AI in part because it’s facing serious external threats that have stalled their advertising growth and sunk their stock price,” said Insider Intelligence principal analyst Yory Wurmser. “On the one hand, Apple’s App Tracking Transparency has made targeting and tracking more difficult for advertisers on Snapchat. That’s played a big role in Snapchat’s dropping ad revenues.”

Snap reported revenue of $1,068 million, down from $1,111 million last year, according to its 2023 second-quarter earnings.

Competing against TikTok

Snap is testing new revenue streams via in-app purchases for Dreams. Regular users will get one free pack of eight Dreams with the option to purchase extra sets of eight for $0.99 each. Meanwhile, Snapchat+ subscribers will get a monthly allocation of one free pack containing eight Dreams and can get additional sets of eight by paying $0.99 per set.

“But things are moving very quickly in AI,” said Wurmser. “TikTok has momentum overall at the moment, so a successful global launch of [its chatbot] Tako could quickly erase Snap’s AI lead.”

Wurmser estimates Snap’s U.S. ad revenue to fall to $2.08 billion, down by 1.8% this year. In contrast, TikTok is expected to grow 23.1% to $6.19 billion.

Luring more ad dollars

Despite being among the first to launch a generative AI chatbot, Snap’s My AI, which started testing sponsored links in May, hasn’t managed to lure advertisers to spend on the platform, some buyers told Adweek.

“Our media spend ranges between 2-10% on Snap,” said Constantine. “Currently, it’s on the low end and definitely hasn’t increased since My AI was launched.”

For ad agency Collective Measures, up to 20% of the annual media budget goes to Snap’s in-feed ads or Stories, specifically for clients whose audience utilizes the Snap platform, according to Theresa Swiggum, media director, of Collective Measures. However, most of the agency’s brand partners aren’t looking into My AI’s sponsored ads yet.

“Snapchat is never going to be the top social media platform in terms of time spent or overall reach,” said Swiggum.