How Snap's layoffs impact its ad business

Snap CEO Evan Spiegel outlined the company’s reorganization plans today, unveiling executive appointments to lead the business, following the departure of two high-profile ad leaders, Jeremi Gorman and Peter Naylor, who both are headed to Netflix. The new structure gives advertisers a clearer sense of Snap’s priorities and how it will work with the ad world after Gorman and Naylor leave. Spiegel announced that Jerry Hunter would rise to chief operating officer at Snap, a new role that will lead engineering, ad products, ad sales and more. The executive change was part of a broader shift at Snap, which is laying off 20% of staff as the company looks to save money during a turbulent economic climate. The chief operating role replaces the corporate structure where Gorman was chief business officer. Hunter has been at Snap since 2016 as a senior engineer, and his appointment to the top of the ads and engineering hierarchy shows that Snap is prioritizing ad tech. Hunter helped build Snap’s automated ad platform, and that’s an area where the company needs to focus energy. “Jerry has repeatedly demonstrated operational rigor at scale,” Spiegel said in the announcement, “leading our business through several challenging transitions including the build out of our advertising platform, the rebuild of our Android product, our infrastructure optimizations, and most recently, significant investments in our Platform Integrity team. I believe Jerry’s promotion will result in both better short-term execution as well as a higher velocity of long term innovation.” Related: Why Netflix's big ad hires are problematic for Snap Meanwhile, Luke Kallis, Snap’s VP of U.S. advertising solutions, will step up to fill the role left by Naylor, who served as VP of Americas, a Snap spokesperson said. Gorman and Naylor are both heading to Netflix to help the streaming giant build its ad business. Netflix has partnered with Microsoft to build a connected TV ad service, and Netflix had been searching for key executives in advertising to help go to market. Gorman is set to become Netflix’s president of worldwide advertising, and Naylor will be VP of ad sales. Advertising leaders have said Snap could face challenges after losing two stabilizing pillars of its ads business. But the restructuring also shows that Snap has new needs as a business. Hunter is known for ad tech, which is what Snap needs to support programmatic advertising on mobile devices. Snap has said that its revenue outlook is lower than expected this year. Snap is dealing with the same problems that afflict the rest of the mobile marketing landscape. Apple and Google are evolving how they share data with apps on mobile devices, disrupting the normal course of advertising. Marketers need new methods of targeting and measuring ads, and apps like Snap are developing new application platforms and data products to reconfigure how marketers maintain signals. In public filings on Wednesday, Snap said that its short-term goals were primarily focused on improvements to its ad platform, including first- and third-party measurement. Measurement is a key for performance marketers on apps, because the advertisers need to know if a platform is driving sales and downloads. Apple’s data changes made it less clear when ads worked. Spiegel also said Snap would hire new presidents for the Americas and the Asia Pacific regions. And Snap already hired Ronan Harris, who was a VP with Google in the UK and Ireland, and will be president of Europe, Middle East and Africa at Snap. Also, Dave Roter remains at the company as VP of global agency partnerships. Snap made the corporate changes while also announcing it would cut 20% of its workforce, or about 1,250 people. Snap also said it was cutting production of original shows, which were a core part of its programming strategy on mobile, and Snap would shut down investment in mini apps, games and its camera-drone project called Pixy. Even though Snap is stopping development of original shows, it still has videos from publishers and creators on Discover, its media hub. Snap said that its mid-term goals include improvements to its algorithm to recommend content, and it will continue to try to develop Spotlight, which is a video feed that resembles TikTok. The Chinese-owned TikTok has emerged as a major competitor, and many U.S. apps are trying to figure out how to compete with its addictive algorithm. Spiegel said that Snap needed to focus on revenue, user growth and augmented reality, which is one of the most innovative applications in the camera app, and part of its long-term future. Snap said in its public filings that it could save $500 million after implementing the job and program cuts. Snap’s public filing also gave new details about Gorman’s decision to leave the company. Gorman notified Snap on Friday. Gorman’s last day will be Sept. 16, Snap said. Meanwhile, Hunter’s new executive compensation package included $19.5 million in restricted stock units that will vest quarterly over the next 39 months, Snap’s filing said.

How Snap's layoffs impact its ad business

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