Estimates for Snap advertising revenue in the US for 2018 have just been downgraded from $1.03 billion to $662.1 million. eMarketer had previously projected higher ad revenues for the year, but revised its projection in line with dropping ad costs as Snap Inc automates its buying processes.
According to the latest estimates, Snapchat will be unlikely to reach $1 billion in ad revenue until 2020 in the US.
Ad revenue increased 85.6% in 2017 and is projected to jump just 18.7% in 2018. This is in line with Snap’s change in ad delivery. At the same time, the analysts predict that the changes will attract more advertisers due to lower prices.
“Snap rolled out its programmatic ad platform in June 2017. While the transition to a self-serve format has increased the number of advertisers, it has also resulted in lower ad prices overall,” explained Debra Aho Williamson eMarketer principal analyst.
“Programmatic ads are typically cheaper because the automated auction infrastructure reduces (and sometimes eliminates) the need for salespeople to get involved. Some advertisers report strong ROI from programmatic ads on Snapchat, but many others remain skeptical. They are concerned about the size of Snapchat’s audience and feel that measurement and targeting still lag behind Facebook.”
This means that Snap’s share of the digital ad market in the US is now at 0.6%. Meanwhile, Snap’s mobile market share will be 0.9% in the US in 2018.
Williamson added that Snap would have to restore user engagement in order to drive its ad business. In. 2018, the company had 7% more users than in 2017.