Emarketer expects that ad revenue that the social platform Snapchat brings will grow by 24% by the end of this year to get to $832.1 million. The image messaging app has amped its efforts to sell ad placements in their Stories and Videos to mobile marketers. The company expects that Snapchat’s sales will start declining steadily next year to get a 22% gain in 2020 and end up at $1.01 billion, then later bump to 1.2 billion in the year after that.
Snapchat ‘s revenue will increase even if user growth has been stagnant in major markets like the U.S. EMarketer expects that the daily users of the app in the U.S will decrease by 2.8% in 2019. Despite the decline in the number of daily users, the company estimates that the app’s global user base per month will rise to 297.7 million users by the end of the year, an increase of 2019.
In 2018, eMarketer expected that Snapchat would have an ad revenue half of what they had the year before. The app’s shift informed these forecasts to programmatic sales which consequently lowered the company’s sales. However, self-serve ad sales have made the company’s customer base broader making room for medium-sized businesses and small enterprises.
The latest forecast by eMarketer for Snapchat points to the fact that the app could realize growth in sales in double digits for the coming two years even though the industry is mainly shifting in the way advertisers are spending the dollars. In 2018, the research firm forecasted that in the U.S, mobile ad spending would reach $141.4 by 2022 or it would be over double what was spent on TV. EMarketer’s latest reports show Snapchat as likely to have 0.6% of the digital ad market in the U.S this year, hardly competing with Facebook, Google, and Amazon.
Snapchat draws strength from having an ability to reach young adults and teens all over the world. Warner Bros, among other film studios and together with amusement park operators like Six Flags and Disney have used the platform to run campaigns that capture the young audiences and spend lesser time than traditional advertising on TV, for example, did. In 2018, Snapchat prioritized AR marketing campaigns working together with companies like Dunkin and Bud Light to create interactive games with AR shopping tools for example. Meanwhile, the company is making headway in self-serve AR ads with over 100 brands running ad units and making the ads gain traction among big name brands.
Snapchat has also focused on mobile gaming. This will make the company better able to compete against Apple, Google, and Facebook. The company is said to be busy developing a gaming platform that is due for announcement in the coming month. Last month, Facebook introduced a dedicated gaming tab on its app to allow users to play. Just this week, Apple announced an Arcade that is due to launch in the fall and will collect over 100 exclusive games at a flat fee. Last week, Google unveiled a video platform, Stadia, which promises players an ability to stream games from the cloud without needing a console. Mobile gaming is a significant opportunity for advertisers to capture a loyal customer base.
Meanwhile, the parent company, Snap, saw a quarterly loss of 45%, dropping from $350 million at the end of last year to $191.7 by the end of the first quarter of 2019. Ad impressions went up by 179%, but the pricing of the ads decreased by 48% as the company shifted to self-serve. Snapchat’s user base has been steady at 186 million after two declines in the past six months from 191 million. The platform’s premium content that includes shows and publisher stories has helped to increase revenue from 2017.