A new study from research firm eMarketer suggests that Snapchat’s ad revenues are slated to explode in 2017 — to the tune of nearly $1 billion. After clocking $366.69 in ad revenues this year, the company will bank $935.46 in 2017, according to the report, which eMarketer says incorporated consumer adoption estimates, monetization trends at similar social networks, and interviews with execs from ad agencies, brands, and publishers. That would mark growth in 2017 of more than 155% year-over-year.
eMarketer predicts that Snapchat’s ad revenues will hit $1.8 billion in 2018 — representing growth of roughly 88%.
Currently, Snapchat’s Discover section — which features exclusive daily content from bold-faced publishers like BuzzFeed, Mashable, and CNN — comprises the lion’s share of ad revenues, 43%. However, Snapchat began inserting ads within users’ Stories in June, and eMarketer estimates that these ads will overtake Discover ads next year, generating 37.8% of the company’s total revenues.
“Advertisers are attracted to Snapchat for its broad reach among young millennials and those in Generation Z,” said eMarketer principal analyst Cathy Boyle in a statement. “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.” And despite early concerns about measurement, “Snapchat has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on,” Boyle added. “What it has yet to prove is whether it can consistently deliver a better return on investment for advertisers than other social networks.”
Another challenge for Snapchat is the fact that after launching ads just last year, it’s still playing catch-up to competing platforms like Facebook and Twitter. While 31.6% of all social network users in the US use Snapchat, the service only captures 2.3% of social network ad dollars, according to eMarketer.
Looking ahead, a key area of opportunity for Snapchat will be international expansion, as the company currently derives 95% of ad revenues from the US. eMarketer says that this could change as soon as Snapchat starts monetizing elsewhere (it has a particularly substantial user base in the UK), and that a quarter of ad revenues could come from outside of the US by 2018.