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Snapchat ad revenue to nudge USD 1bn by 2017, says eMarketer

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Written by Revati Nair

Snapchat is poised to put paid to criticism of its initial ad offerings, says an eMarketer forecast, its first for the social platform, on expected ad revenues. Snapchat, says the forecast, is set for explosive growth in ad revenues in the coming years — worldwide, it will generate $366.69 million in ad revenues this year, with that figure jumping to close to a billion — $935.46 million to be precise — in 2017.

Snapchat will capture 2% of social network ad dollars in US

eMarketer principal analyst Cathy Boyle said, “Advertisers are attracted to Snapchat for its broad reach among young millennials and those in Generation Z, which are valuable demographic groups for many businesses.  To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads, and more sponsored geofilters and sponsored lenses.”

Image-for-snapchat-ad-revenue-forecast-storyIn the US, Snapchat’s Discover feature generates the largest share (43%) of the company’s ad revenues. That balance will shift next year, as Stories overtakes Discover as the dominant ad revenue source, generating 37.8% of the company’s US ad business.

While Snapchat garners a strong 31.6% share of social network users in the US, it only captures 2.3% of social network ad dollars, having launched its ad platform in mid-2015. It faces challenges as it competes with more established players Facebook and Twitter, particularly in the areas of targeting and measurement.

snapchat-graph-2Snapchat currently derives 95% of its ad revenues from the US. However, as it begins to monetize users in other countries where it has a substantial user base—particularly the UK—the non-US share of its ad revenues will grow. By 2018, a quarter of its ad revenues will come from outside the US.

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Boyle

“Snapchat has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on,” said Boyle. “What it has yet to prove is whether it can consistently deliver a better return on investment for advertisers than other social networks.”

Editor’s note: eMarketer built a Snapchat ad revenue model using our proprietary consumer adoption estimates, monetization trends at similar social networks, monetization assumptions for different Snapchat ad products (including Snap Ads within Discover and Live story, Sponsored Geofilters and Sponsored Lenses), and monetization assumptions for non-US Snapchat users. eMarketer also conducted interviews with executives at ad agencies, brands, and media publishers.

 

About the author

Revati Nair

Revz to her friends, Revati is a graduate in Media and a shutterbug. She's been writing for some time now, and has trained as a photojournalist with a leading daily newspaper too. Twitter: @NairRevati

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