In 2013, Facebook unsuccessfully tried to buy Snapchat for roughly $3 billion in cash. At the time Snapchat’s rejection of Facebook’s offer sounded crazy. That now doesn’t seem quite as crazy given eMarketer’s prediction that Snapchat will generate nearly $1 billion in ad revenue next year.
Emarketer expects Snapchat ad revenue to hit $935.5 million in 2017 and $1.7 billion in 2018, with a growing share of that revenue from outside the US. The opportunity is expressed in the gap between Snapchat’s nearly 32 percent penetration among social network users (US) and its tiny share of ad revenues flowing into social networking: 2.3 percent.
Given the dominance of Snapchat’s audience by 18 – 34 year olds, it makes sense that the company will see a lot more ad dollars as it creates more ways for brands and marketers to reach that audience. According to comScore, 76 percent of Snapchat’s user base is younger than 35, with nearly half younger than 25.
Emarketer estimates that 43 percent of Snapchat’s US ad revenues are currently from Discover Ads. However the firm predicts that Stories will surpass Discover next year as Snapchat continues to diversify and ramp up its various ad products.