Snapchat is on track to generate more than A$1 billion in global ad revenue in 2017 in a period of rapid growth, according to eMarketer.
This year, the video-based social platform will grow annual ad revenue six-fold to A$483 million (US$367 million), up from A$78 million in 2015. Revenue is projected to reach A$1.23 billion in 2017 and then soar to A$2.32 billion in 2018.
By way of comparison, Facebook reported ad revenue of A$8.2 billion in the second quarter of this year, while Google made more than A$27 billion in the same period.
EMarketer principal analyst Cathy Boyle said Snapchat's broad millennial audience made it an attractive proposition for advertisers.
“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,” she said in a press release.
To work out projections, eMarketer used its own consumer adoption estimates and ad product assumptions to build a a revenue model.
The research company provided a breakdown of the revenue generated by different Snapchat features, adding that the US currently accounts for 95% of global ad revenue with non-US revenue set to grow to 25% by 2018.
Snapchat's Discover feature accounted for 43% of ad revenue – the largest slice – followed by Stories (38%), although the balance will gravitate towards Stories next year.
Although Snapchat accounts for nearly a third of the US social media audience, at present it only captures 2.3% of ad revenue.
“Snapchat has improved its targeting capabilities and partnered with 11 measurement firms to address the concerns voiced early on,” Boyle added.
“What it has yet to prove is whether it can consistently deliver a better return on investment for advertisers than other social networks.”
Revenue projections (in US dollars)
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