Snap Is Selling DM Shopping While Its Highest-Value Users Quietly Leave
Snap’s global VP of SMB and mid-market, Sidharth Malhotra, made a pitch last week that sounded like a lifeline for brands still working to diversify beyond TikTok. The core argument: Snap reaches people nobody else does, and those people are ready to buy through their DMs.
“40% of U.S. users on Snapchat aren’t showing up on TikTok and 80% aren’t showing up on Pinterest,” Malhotra told Adweek. Unique reach, untapped shoppers, conversational commerce as the future of social selling.
It’s a compelling story. It’s also a story being told by a platform whose highest-value users are heading for the exit.
The pitch sounds better than the platform metrics
Snap is positioning conversational commerce (specifically its Sponsored Snaps inbox ads) as the thing that separates it from every other short-video platform chasing TikTok’s ad dollars. The format works like this: a brand shows up as an unopened message in a user’s inbox. Open it, and you’re in a 1:1 chat where the brand can make personalized offers or provide automated support. According to Snap’s own data, Sponsored Snaps drive 2x higher conversions per full-screen ad view compared to traditional placements.
The pitch is smart. It also conveniently skips over the fact that Snap’s North American daily active users dropped to 94 million in Q4 2025, down 6% year over year. Not a blip. The company deliberately cut community growth marketing spend to prioritize monetization. In earnings language, that’s a “strategic pivot.” In plain language, they decided a smaller, higher-spending user base was worth more than a growing one.
That trade-off shows up everywhere. eCPM dropped roughly 8% year over year even as impression volume climbed 14%. More inventory, cheaper rates, fewer high-value users to put it in front of. Active advertisers grew 28%, which sounds impressive until you realize total ad revenue only climbed 5%. A lot of new small advertisers spending very little.
And Snap knows the trajectory isn’t great. The company has been offering $10,000 in bonus ad spend when brands commit $50,000, trying to lock in budget while TikTok’s ownership transition keeps advertisers nervous.
Discovery engines and conversation engines solve different problems
Something doesn’t quite add up when you put Snap’s pitch next to what TikTok actually built, and this is where I think the positioning slightly falls apart.
TikTok built something genuinely novel: a discovery engine that put products in front of people who weren’t looking for them. That’s a specific, hard-to-replicate capability. The algorithm introduces you to things. You didn’t search for the Stanley cup or the Dyson Airwrap. TikTok decided you needed to know about them.
Snap’s conversational commerce solves a different problem entirely. DMs are where you talk to people you already know, about things you’re already considering. A Sponsored Snap showing up in your inbox is closer to a targeted email than a discovery feed. That can be powerful for consideration and conversion. It doesn’t generate demand the way a discovery feed does.
Fenty Beauty recently proved this model can work at scale through WhatsApp, using an AI advisor to guide shoppers through product selection. The product page itself is becoming optional when the conversation does the selling. But even Fenty’s WhatsApp play worked because users initiated the conversation. They already wanted the product. The DM was the conversion tool, not the awareness tool.
Snap is trying to be both. I’m not convinced DMs can do both simultaneously.
What the budget math actually looks like
Let me be direct about what I’d test and what I wouldn’t.
Snap claims $10 billion in direct sales driven through the platform. Their AR commerce features reach over 100 million users, and they report that 63% of those users purchase after discovering products through AR try-ons. Those are Snap’s self-reported figures, which come with the obvious caveat.
What’s harder to argue with: purchase volume for commerce advertisers grew 39% year over year. And Snap’s ROAS for e-commerce, according to a Search Engine Land analysis, beat most other platforms while delivering the lowest CPA measured.
If you’re running e-commerce with a visual product (beauty, fashion, accessories), Snap’s DM format probably deserves a test. The 40% unique reach claim, if it holds, means you’re genuinely reaching people outside your Meta and TikTok audiences. That’s worth knowing.
But don’t reallocate your TikTok discovery budget to Snap’s inbox. They do different things. TikTok (or Instagram Reels, or YouTube Shorts) introduces people to your brand. Snap’s DM format converts people who already have some awareness. Cut your top-of-funnel discovery spend and replace it with mid-funnel DM conversions, and you’ll watch your pipeline dry up in about 90 days without understanding why.
The smarter play, from what I’ve seen: keep your discovery spend where it is. Carve out 10-15% of your consideration budget for a Snap Sponsored Snaps test. Run it for 30 days. Compare CPA against your Meta DM ads and your email remarketing. If Snap beats both, scale it. If not, the information still cost less than a single day of your Meta spend.
The two-tier platform problem nobody’s addressing
The deeper issue with Snap’s pitch is one they probably won’t bring up on an earnings call. The company is deliberately shrinking its North American user base (the one with $10.88 ARPU) while growing its Rest of World base ($1.24 ARPU). That’s an 8.8x revenue gap per user.
Snap is essentially building a two-tier platform. A smaller, monetizable audience in the U.S. and Europe, and a large, mostly unmonetizable audience everywhere else. For advertisers targeting U.S. consumers, the relevant number is not 474 million global DAUs. It’s 94 million North American DAUs, trending downward.
Ninety-four million is still a real audience. But it’s an audience that’s moving in the wrong direction while Snap asks you to commit more budget to it.
Test the inbox, don’t bet your funnel on it
I think Snap’s DM commerce format is probably undervalued right now. Sponsored Snaps converting at 2x the rate of standard placements is not nothing. The unique reach claim is genuinely useful for brands who’ve exhausted their Meta and TikTok audiences.
Conversational commerce and discovery commerce aren’t interchangeable, though. Any media plan that treats Snap’s inbox as a TikTok replacement is going to learn that lesson expensively. The smart move is a controlled test with a small budget, clear CPA targets, and a 30-day window. The platform is shrinking in your most valuable market. That doesn’t mean the inventory is worthless. It probably means you should buy it while it’s cheap and the audience is still there, without confusing it for something it was never built to be.
Notice Me Senpai Editorial
