Snapchat’s advertising revenue is expected to increased 24% to $832.1 million in 2019 according to forecasting by eMarketer. The rise is largely driven by the company improving and expanding its ad offering to include video ads and Stories ads.
Although the popular social messaging app will be reaching the $1 billion net ad revenue milestone in 2020, eMarketer said it lowered its forecast twice due to the company’s decision to sell ads programmatically which drove down prices.
It has previously been reported that CPMs fell to between $3 to $8 after Snapchat adopted its automated selling technologies.
Prior to rolling out a self-serve platform, the company had charged brands up to $750,000 for one ad.
“Self-serve programmatic buying has expanded Snapchat’s reach to more advertisers, especially small and medium-sized businesses that can invest in ads at lower bid prices. However, moving the vast majority of their ad inventory into this lower cost structure has tempered earlier growth estimates,” said Monica Peart, senior forecasting director at eMarketer.
At the same time, the app faces stalling user growth. Average daily active users were 184 million in Q4 2018 – the same as in Q3 2018.
eMarketer expects monthly US users to drop 2.8% in 2019 to 77.5 million. Meanwhile, worldwide usage is forecast to grow 11.3% to 297.7 million.
However, Snapchat ad revenues in the US are estimated to grow 24.3% in 2019, representing 0.6% of the US digital ad market, indicating that the company’s video and Stories ad efforts are paying off.