Commentary

Snapchat Engages Millennials and GenZ

According to a new eMarketer study, the social network Snapchat is expected to generate more than $360 million in worldwide revenue this year, with that figure jumping more than 150% to nearly $1 billion by next year.  After weathering criticism of its initial ad offerings, Snapchat is poised for explosive growth in ad revenue in the coming years, says the report.

Snapchat Ad Revenues Worldwide ($Millions; % Change Y-O-Y)

Year

(Paid) Ad revenues

Percent Change

2015

$59.2 MM

-

2016

$366.7

519.0%

2017

$935.5

155.1%

2018

$1,760.1

88.2%

Source: eMarketer, September 2016

Cathy Boyle, eMarketer principal analyst, says that “… advertisers are attracted to Snapchat for its broad reach among young Millennials… and Generation Z… valuable hard-to-reach demographic groups… to engage… Snapchat has expanded its advertising portfolio… “

Continuing with the eMarketer report, while Snapchat holds a 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, says the report.  Data from the study shows that Snapchat currently derives 95% of its revenue from the US.  Where it has a substantial user base, says the report, its share of non-US revenue will grow, and 2018, a quarter of its revenue will come from outside the US.  

U.S. Snapchat Ad Revenue Share Worldwide

Year

% Worldwide Revenue Share

2015

98%

2016

95%

2017

86%

2018

75%

Source: eMarketer, September 2016

N.B.  In developing certain data for this report, eMarketer built a Snapchat ad revenue model using 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. In addition, eMarketer conducted interviews with executives at ad agencies, brands, and media publishers.

For additional information from eMarketer, please visit here.

 

 

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