The Strategist

Analysts reduce forecast for Snap’s advertising revenue by another $ 130 million

10/04/2017 - 12:18

It is expected that the advertising revenue of Snap in the US in 2017 will decrease by $ 127.5 million compared with earlier forecasts. This is reported by eMarketer.

Marco Verch
Marco Verch
Analysts lowered this forecast from 770 million dollars to 642.5 million, noting that many marketers still consider Snapchat to be an "experimental channel" for advertising.

The forecast has been falling for the second time: it was originally expected that the advertising revenue of Snap in the US will amount to 800 million dollars in 2017. However, in March this figure was reduced by 30 million due to strong competition in the market.

eMarketer expects that in 2017 the total advertising revenue of Snap in all markets, including the US, will be $ 774.1 million, compared to $ 900 million forecasted at the beginning of the year. For comparison: a similar forecast for advertising revenue for Facebook, the strongest competitor Snap, is $ 3 billion. Experts expect that in 2019 this figure will grow to 6.84 billion dollars.

Recently, the audience of Instagram, a service owned by Facebook, has increased to 500 million users a day - three times more than Snap (173 million).

Last week, shares of the North American company Snap Inc. rose more than 7%, to 14.54 USD. This is the most noticeable increase in the value of securities of the owner of the Snapchat instant messenger since it entered the public market. The company has every chance to restore lost ground, as advertisers continue to hope that Snapchat developers have some fresh ideas for the development of advertising in the global network.

According to the statement of M. Pritchard from Procter & Gamble, made by him at the conference in Cologne, founders of advertising platforms on the Internet ran out of ideas. Pritchard, considered one of the most eminent marketers on the planet, expressed conviction that it is high time for such sites to start using breakthrough advertising technologies instead of annoying advertisements.

It is worth noting that the problem voiced by Pritchard is indeed a massive one. Users all around the world are increasingly ignoring intrusive advertising content, using special blockers to neutralize it. Leaders of the global online advertising market continue to expand their own video platforms in order to saturate the advertisement of video content. Meanwhile, the growth opportunities for this segment are extremely limited.

Against this background, Snap sees advertisers as one of the possible creators of new advertising formats. The company's developers have repeatedly demonstrated their abilities in terms of inventing the services demanded by users. Snap is actively working on new services. In particular, we are talking about short forms of content that will definitely be of interest to advertisers. Innovation of Snap Inc., is, in fact, the main bullish trend for its securities. However, the stock quotes of the American company are still under pressure from the social platform Facebook. According to investors, the social network of Mr. Zuckerberg will continue to borrow from Snap the most successful innovations, thus depriving Snapchat of its user audience.