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Forecast downgrades 2018 Snap ad-revenue outlook by 36 percent
In something of a blow to Snap, eMarketer has lowered its ad forecast for the company by a significant 36 percent. The firm says that’s due largely to the downward pressure on ad pricing from the programmatic platform the company introduced in 2017.
However, it expects there to be a pricing recovery in the near term. Roughly 90 percent (or more) of Snap ads sold are now bought programmatically.
Ad revenue projection revised downward from $1 billion. According to the revised forecast, Snap will take in just over $662 million in digital ad revenue this year. In March eMarketer projected that Snap would see ad spending of more than $1 billion.
It now says that Snap won’t reach that milestone until 2020. However eMarketer says that prices will climb next year and usage growth will outpace Facebook and Twitter, though not Instagram.
Snap usage flat — under 200 million. Snap has recently struggled with user engagement and growth, which is keeping its stock price down. As of the second quarter, Snap reported 188 million daily active users, which represented a decline of 3 million from the previous quarter. By contrast, Instagram has more than 400 million daily users according to third party estimates.
The eMarketer projection places Snap at below 1 percent of US digital advertising. That’s compared with Google and Facebook, which combine for roughly 58 percent, according to the firm. All of Snap’s revenue comes from mobile advertising.
Snap has been rolling out a steady stream of new products in an effort to capture more engagement, market attention and revenue. In June of last year the company acquired location intelligence company Placed to help measure the offline impact of its ads. Two months ago, Snap started allowing advertisers to buy video ads programmatically. And late last month Snap introduced visual search and e-commerce in partnership with Amazon.
What to expect. In the short term Snap will continue to experiment and roll out new consumer features and options for marketers. In the medium term, some analysts and industry observers don’t think Snap will be able to break out of its current position and will ultimately be acquired — something investors will start to push for if its stock price doesn’t improve.
Two potential buyers mentioned are Disney and Amazon. But there are a number of others, including Google.
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