eMarketer has lowered its ad revenue outlook for social media platform Snapchat suggesting that revenues will total $774.1 million in 2017. Overall, growth will be slower than expected though, which is why the research firm’s original forecast of $900 million back in March this year has been revised.
Snap offers a range of creative advertising options as well as a highly engaged audience, but as of yet advertisers have been careful to fully commit to running their campaigns on Snapchat. It appears the platform has not yet proven value for money.
Total US advertising revenue for the app will come to $642.5 million, down from $770 million originally proposed in 2017 and $805 million in July 2016.
Despite the revised estimates, eMarketer does expect Snap to show some strong growth over the next 24 months with US ad revenues reaching more than $2 billion by 2019 (down from $2.2 billion predicted in March 2017).
Indeed, Snapchat continues to be on track to surpass Twitter in terms of ad revenues. eMarketer suggests that the company will generate $1.18 billion in advertising revenues compared to $1.16 billion on Twitter. By 2019, Snapchat may have double the ad revenues compared to Twitter.
However, competitor Instagram is much harder to beat and expected to bring in $3 billion in ad revenues in the US alone in 2017. That figure is expected to rise to $6.84 billion in 2019.
Although advertisers agree that the creative possibilities on Snapchat are huge, a minority of them are actually putting aside budgets to run ads on the app. According to a survey by Advertising Age and RBC Capital Markets, 26% of advertisers are putting aside just 1%-10% or more of their digital budgets to Snapchat campaigns.
Meanwhile, 67% are putting aside expenditure for Twitter campaigns.
Larger brands are harder to attract as they will need to build trust in a platform in order to fully commit large budgets to it. For smaller advertisers, Snapchat may offer some good opportunities, but may be too expensive compared to Facebook.
October 5, 2017