Snapchat is one of the fastest growing social media platforms in the world. During the Olympics alone it recorded 50 million visitors who watched Olympics based content. Snapchat already sees 150 million daily users and these figures are expected to grow with time.
Now, not only is the user base for Snapchat growing but it is expected that the ad revenues for the app could reach almost a billion dollars (935.46 million to be precise) according a report by eMarketer. With a larger user base it is expected that advertisers would flock to an app like this in order to reach a larger audience that has a niche reach.
“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,” said eMarketer principal analyst Cathy Boyle. “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.”
The “Discover” feature is currently the largest contributor to Snapchat’s ad revenue in the U.S with 43 percent and it only captures 2.3% of social network ad dollars, having launched its ad platform in mid-2015 according to the eMarketer report.
“Snapchat has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on,” said Boyle. “What it has yet to prove is whether it can consistently deliver a better return on investment for advertisers than other social networks.”
Even though Snapchat is gaining quick popularity around the globe, it faces stiff competition from Facebook and Twitter. Currently, Snapchat derives 95 percent of its ad revenues from the US and if it focuses on other countries where it holds a decent user base the ad revenues are only expected to grow. eMarketer predicts that by 2018 a quarter of Snapchat’s ad revenues will come from outside the US.
It is also rumoured that Snapchat will go public as early as next year. According to various media reports the company is in talks with various investment bankers and is planning to file an IPO later this year.
Snapchat has reportedly raised more than $2.6 billion from investors ranging from financial services corporation Fidelity Investments and Chinese online marketplace Alibaba to venture capital firms including Kleiner Perkins Caufield & Byers, IVP and Benchmark. The startup is currently valued at $16 billion.