Brief:

• Snapchat parent company Snap today (Sept. 24) announced a visual search feature that will allow users to leverage the app's camera function to search for items on Amazon.
• To use the visual search function, Snapchat users scan a physical product or barcode, pressing and holding on the camera screen. If the item is recognized, an Amazon card will appear, connecting the user to a product page on the Amazon app or website.
• Testing for the visual search function is beginning this week and will roll out slowly to all users.

Insight:

Snap's partnership with Amazon on visual search builds on the app's momentum in the m-commerce space, which could, in turn, elevate Snapchat beyond a niche social media tool to become more sticky and have more utility in users' everyday lives. Amazon's affiliate marketing program pays commissions to businesses that provide links to its products, and if the Snapchat visual search proves popular, it could generate much sought after revenue for the image-sharing platform that has struggled to significantly grow on that front since going public last year.

The official announcement of a visual search feature in Snapchat — first reported by TechCrunch in July — could help Snap rebound after its user growth declined for the first time, down 2% to 188 million, in Q2 2018. While its revenues rose 44%, the company is still working to close the gap between revenue and losses, which numbered $262.3 million and $353 million, respectively, in the last quarter.

Snap's earlier experimentations with m-commerce have appeared to pay off, which could spell good news for a tie-up with an e-commerce juggernaut like Amazon. A sneaker drop by Nike's Jordan brand — the first product to be sold directly through the Snapchat app — ran out of stock within minutes back in February. Adidas iterated on the idea with its own sneaker drop that sold out quickly in pre-release in August.  

The visual search functionality with Amazon is Snapchat's latest application of augmented reality (AR) as the company works to increase its appeal with advertisers. Snapchat has brought Shoppable AR to Adidas, Coty and Domino's, and more than 100 brands have run its programmatic AR ad units, including Foot Locker, Nike and Hershey's.  

Snapchat's visual search also follows similar features offered by other platforms and apps. Google Lens works on the company's Pixel smartphones and some Android apps, while Pinterest's Lens has seen visual searches jump 140% to 600 million queries every month.

Amazon, for its part, is quickly expanding into different advertising areas, and likely values Snap as a partner due to Snapchat's predominantly Gen Z and millennial audience — age groups that do much of their shopping via mobile and social channels. Snapchat at one point was seen as a potential threat to the digital advertising duopoly of Facebook and Google, but Amazon increasingly appears the more likely third major player, and a team-up with Snap could strengthen that positioning. 

EMarketer expects Amazon will generate $4.61 billion in U.S. ad revenue this year, higher than the $2.89 billion the researcher previously forecast in March. Amazon is now the No. 3 digital advertising platform in the U.S., beating tech companies like Verizon's Oath and Microsoft. Advertising sales are also Amazon's fastest-growing category, with 129% year-over-year growth in second-quarter results reported in July.