Snapchat is set to enjoy explosive growth in ad revenues over the coming 12 months, according to eMarketer’s first forecast for the platform.
It calculates that the app will generate over $367m worldwide in 2016, jumping to $935m in 2017. Snapchat currently derives 95% of its ad revenues from the US, with non-US share set to grow to over 25% by 2018.
Snapchat’s Discover feature is shown to generate the largest share of ad revenue in the US at 43% currently, set to shift to Stories over the next year. However, the platform is still only capturing 2.3% of social network ad dollars, despite its 32% audience share, due to only launching mid-2015, with much growth needed in measurement and targeting before it can compete with established players.
“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,” said eMarketer principal analyst Cathy Boyle.
“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 geo-filters and sponsored lenses.”
However, the platform has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on and prove whether it can deliver better ROI for advertisers than competing social networks.