EMarketer: Snapchat's ad business will climb 24% this year
- Snapchat's ad revenue is set to rise about 24% to $832.1 million this year as the image-messaging app sells video and Stories ad placements to mobile marketers, researcher eMarketer predicts. The company estimates Snapchat's sales growth will steadily decline beginning next year, including a 22% gain in 2020 to $1.01 billion and a 20% bump to $1.2 billion in 2021.
- Snapchat's revenue will swell despite stalling user growth or declines in major markets like the United States. EMarketer forecasts the app's U.S. daily user base will dip 2.8% to 77.5 million this year. Despite that daily user decline in the region, eMarketer forecasts that Snapchat's global monthly user base will rise 11% to 297.7 million in 2019.
- Last year, eMarketer cut its ad revenue forecast for Snapchat twice as the app shifted from managed-service selling to automated programmatic sales that led to lower ad sales. However, programmatic ad sales broadened the company's customer base among small and medium-sized businesses, Monica Peart, eMarketer's senior forecasting director, said in the report.
EMarketer's latest forecast for Snapchat indicates that the image-messaging app could show double-digit sales growth for at least two more years amid a broader industry shift in ad spending to mobile platforms. Last year, the researcher forecast that mobile ad spending in the U.S. will reach $141.4 billion by 2022, or more than twice the money spent on TV at $68.1 billion. EMarketer's latest estimates indicate that Snapchat will capture 0.6% of the U.S. digital ad market this year, dwarfed by rivals like Google, Facebook and newcomer Amazon.
Snapchat's key strength is reaching young adults and teens in the U.S. and around the globe. Film studios like Warner Bros. and amusement park operators including Disney and Six Flags have run campaigns on Snapchat to capture these younger audiences that spend less time on traditional channels like TV than previous generations. In the past year, Snapchat has prioritized augmented reality (AR) marketing campaigns, teaming with Bud Light and Dunkin' on interactive AR games and with Adidas and Coty on an AR shopping tool. Meanwhile, the company has made headway with its programmatic AR ads, with more than 100 brands running the ad units, signaling that Snapchat ads are gaining traction among major brands.
Mobile gaming is another priority for Snapchat that will heighten competition with Facebook, Google and Apple. Snapchat is said to be working on a gaming platform that will be announced as early as next month. Facebook this month added a dedicated gaming tab to its mobile app and has games on its Messenger app. Apple this week announced an Apple Arcade service will go live this fall, and will charge a flat fee for a collection of more than 100 exclusive mobile games. Google last week unveiled its video game platform called Stadia that promises to let players stream games from the cloud without the need for an expensive console. Mobile gaming poses a major opportunity for advertisers to capitalize on and capture the channel's loyal audience base.
Meanwhile, Snapchat parent company Snap's quarterly loss fell 45% to $191.7 million from $350 million a year earlier in Q4 2018, per a separate company announcement. Ad impressions surged 179% from a year earlier, but pricing declined 48% as the company shifted to programmatic ad insertions. The user base for Snapchat held steady at 186 million in Q4 2018 after two quarters of declines from a peak of 191 million in Q1 2018. Snapchat's premium content, including Publisher Stories, Shows and a redesigned Discover section, helped to more than double ad revenue from the prior year, CEO Evan Spiegel said.