A new report suggests that Snapchat will be a more popular ad platform than Twitter, Yahoo, and AOL by 2020.
The Guardian reports that according to a study by eMarkter, Snapchat could become a more popular advertising platform than Twitter, Yahoo, and AOL within the next three years. The picture and video messaging app is predicted to generate revenue of over $3 billion a year before 2020. This prediction is based on Snapchat’s appeal to the young adult market; recent data shows that 51 percent of Snapchat video users are under the age of 24. In comparison to this only 23 percent of Facebook users and 17 percent of YouTube users are under this age.
Google and Facebook share 58 percent of the $141 billion global ad market; advertisers would likely welcome further platforms to spread their message. Speaking to The Guardian, principal analyst at eMarketer Cathy Boyle said, “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.”
Some advertisers may be wary about the stability of the Snapchat platform, as the company’s market cap rose to $26 billion following their initial public offering, and then fell to $19 billion a short time later. Senior analyst at Pivotal Research Group Brian Wieser 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.”
Snapchat may also be facing stiff competition from Facebook, who recently announced their new “Stories” feature which is similar to Snapchat’s core features. Facebook’s new feature consists of a new in-app camera, a feed of user stories that appear at the top of a user’s News Feed, and a new messaging feature called Direct. Speaking to The Verge, Connor Hayes, the product manager for Facebook stories, said “The way people create content is changing to be from text to photos and videos. This is in turn changing the way they’re sharing with one another and interacting online.” He added: “This is something that Snapchat has really pioneered.”