News

Snapchat to become more popular among advertisers than Twitter and AOL by 2020 says study

Snapchat are set to become more popular than advertising competitors Twitter

Snapchat is set to become more popular among advertisers than Twitter, Yahoo and AOL within three years’ time, according to fresh research from Ampere Analysis.

The study predicts that the ephemeral messaging service is poised to rake in more than $3bn (£2.4bn) in revenue per-year before the end of 2019.

The prediction is based on Snapchat's hold on the youth market, with the data showing that 51% of Snapchat's video users are aged under 24, compared to Facebook’s figure of 23% and YouTube’s which sits at 17%.

Analysts have hinted that given the current advertising duopoly Facebook and Google have on the arena, with both sharing 58% of the $141bn global ad market, that advertisers may be happy to see other opportunities open up.

Cathy Boyle, principal analyst at eMarketer told the Guardian: “You often hear advertisers saying they are getting uncomfortable with such a large portion of ad spend going to just two players. If there can be a third or fourth player they are interested in spreading the wealth beyond the duopoly.”

WPP chief executive Sir Martin Sorrell has previously spoken about the app's potential to become a "third force" alternative but there are many investors and analysts who are wary of the future of Snapchat.

Snap, the company behind Snapchat, saw its stock shares rise from $17bn to $26bn in the first two days of trading following its IPO earlier this month but it has since steadied back to $19bn.

Brian Wieser, a senior analyst at Pivotal Research Group said: "A stock like this is going to be incredibly volatile because there's so little information about the company's track record and it's difficult to extrapolate to the future."

The disappearing photo app is facing extensive competition with Facebook-owned Instagram which launched a Stories rival last summer. Following the move, Snapchat saw a drop in user growth from 7% to 3.2% in the last two quarters of 2016 according to its S1 filing.

The company responded to the drop by saying: "Because our products typically require high bandwidth data capabilities, the majority of our users live in countries with high-end mobile device penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user growth or engagement in countries with low smartphone penetration even if such countries have well-established and high bandwidth capacity cellular networks."

Earlier this month, the Snap Inc-owned app announced its deal with MGM, to develop and produce original content for its Discover platform, adding to its long list of television network content like the BBC, Buzzfeed, ESPN and NBC.

Get the Newsletter

Keep up to date with the latest news and insights.

Subscribe

Danielle Gibson

All by Danielle