Snapchat ad revenues to reach nearly US$1bn next year

Snapchat is due to see “explosive growth” in ad revenues, with the messaging service set to make US$935.5 million next year, according to eMarketer predictions.

The research firm claims that Snapchat’s worldwide ad revenues will climb 155% year-on-year in 2017 from US$366.7 million this year, and will grow by a further 88.2% in 2018 to US$1.760 billion.

“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 geofilters and sponsored lenses.”

Snapchat currently draws 95% of its ad revenues from the US, but its international share will grow as it begins to monetise users in countries like the UK where the service is popular, according to the research.

eMarketer said that in the US the largest share of Snapchat’s ad revenues at 43% are drawn from its Discover platform, which launched last year in partnership with major TV broadcasters and publishers like National Geographic, Vice Media, Comedy Central and CNN.

However, that balance is tipped to shift next year as Snapchat’s Stories feature overtakes Discover as the dominant ad revenue source, generating 37.8% of the company’s US ad business.

While Snapchat takes a 31.6% share of social network users in the US, it only captures 2.3% of social network ad dollars, having just launched its ad platform in mid-2015, according to eMarketer.