eMarketer released its first ad revenue projections for Snapchat, calling for $366.69 million in 2016 and a leap to $935.46 million in 2017.
The market research company said in a release that it built its revenue model for Snapchat by combining its proprietary consumer adoption estimates, trends at similar social networks, monetization assumptions for Snapchat products (including ads within Discover and Live Stories, sponsored geofilters and sponsored lenses) and monetization assumptions for non-U.S. users.
According to eMarketer, Discover generates the largest share of Snapchat’s U.S. ad revenues, at 43 percent, but Stories will overtake Discover in 2017, generating 37.8 percent of its ad business.
eMarketer added that while Snapchat has a 31.6 percent share of U.S. social network users, it only accounts for 2.3 percent of ad spending, as its ad platform did not launch until mid-2015.
The U.S. currently accounts for 95 percent of Snapchat’s ad revenues, but eMarketer sees the non-U.S. share jumping to one-quarter of total ad revenue by 2018, led by countries including the U.K.
eMarketer principal analyst Cathy Boyle said in the release:
Advertisers are attracted to Snapchat for its broad reach among young millennials and those in Generation Z, which are valuable demographic groups for many businesses. To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads and more sponsored geofilters and sponsored lenses.
Snapchat has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on. What it has yet to prove is whether it can consistently deliver a better return on investment for advertisers than other social networks.
Readers: What are your thoughts on eMarketer’s initial ad revenue projections for Snapchat?