- Research firm eMarketer cut its forecast for Snapchat's global advertising revenue by 14% to $774.1 million this year. As recently as March, the firm estimated that the social media platform's worldwide ad revenues would reach $900 million. At the same time, eMarketer cut its forecast for Snapchat's U.S. ad revenue by 17% to $642.5 million for 2017.
- The downward revisions are a direct result of lower estimates for Snapchat's user growth, eMarketer said. The image-messaging app reported 173 million users worldwide in Q2 2017, which disappointed some investors.
- However, Snapchat's U.S. ad revenue will exceed Twitter's by next year, eMarketer estimated, as the company will likely generate $1.18 billion in revenues in 2018, compared with Twitter's $1.16 billion. The following year, Snapchat's revenue should reach almost double of Twitter's, according to the forecast.
Snapchat's parent company Snap Inc., looking to sustain growth after going public in March, has made stronger efforts to appeal to more big-name brand advertisers with improvements to its ad formats, better third-party measurement and significant investments into original video programming. The company also debuted a self-service platform that lets individual users and small businesses run geofilter campaigns that are targeted for highly specific locations.
Most recently, at Advertising Week in New York City, Snapchat unveiled 3-D AR World Lenses for brands running paid campaigns on the platform. Snap is clearly looking to this announcement to rekindle some excitement around continued innovation that's simmered down in the past year, an area where some have suggested it's losing its edge. Non-branded iterations of the 3-D World Lenses such as the notorious dancing hot dog have been huge hits with users, and the branded offering has early interest from major names like Bud Light.
Still, the company has faced heated competition from Facebook's Instagram Stories, which has copied several of Snapchat's iconic features and grown its audience rapidly. Instagram recently said its user base had grown to 800 million, up 100 million since April. That difference in audience size will likely be reflected in ad sales, according to eMarketer in its report. The researcher estimates Instagram's U.S. ad revenue will more than double from about $3 billion this year to $6.84 billion by 2019.
Advertisers also see Snapchat as an experimental platform that still needs to demonstrate its usefulness in building brand awareness. About one in four U.S. ad and marketing professionals surveyed by Advertising Age and RBC Capital Markets in February were devoting 1% or more of their digital ad budgets to Snapchat, compared with two-thirds who spent money on Twitter, eMarketer said in its report.