New projections from eMarketer suggest that UK ad spending on Snapchat is set to rocket through the £100m mark this year as the company continues to add users outside its core market of the US.
According to eMarketer's first ever ad revenue forecast for the company, Snap is expected to generate almost £105m in UK revenues this year, almost double the amount from 2017. Despite this explosive growth, the platform will still only make up less that one per cent of UK digital ad spending this year, with Google and Facebook continuing to dominate the market.
In 2015, Snapchat derived almost 96 per cent of its global ad revenues from the US, but this year, that figure will fall to around 75 per cent, as it focuses on building a larger customer base overseas. The UK is expected to account for 10 per cent of Snap's worldwide revenues in 2018.
"Snapchat continues to pull in users and, by extension, ad revenues," said Bill Fisher, eMarketer's UK senior analyst. "An almost doubling of revenues in 2018 is a great result. But while the user base continues to be dominated by younger age groups, that revenue potential will remain somewhat restricted. And with the financial muscle of Facebook behind close-competitor Instagram, Snap's going to have to work ever harder for those ad dollars."
In fact, Instagram spending is over five times higher in the UK, accounting for 4.9 per cent of all digital ad spending compared to 0.8 per cent for Snapchat. However, Snap could soon overtake Twitter, which brings in 1.2 per cent of all UK digital ad spending.
"We're increasingly seeing advertisers and brands tapping into Snapchat's fledgling advertising platform in a bid to claim a slice of the young consumers market," said Josh Krichefski, CEO of MediaCom UK. "The news today reflects some of the great results our client campaigns are getting on the platform. As it looks to overtake ad spend on Twitter, Snapchat is in a great position and the key will be to continuing innovating and evolving."
Despite these strong revenue projections, Snap continues to fluctuate when it comes to share price. Recent controversies over the app's redesign and social media comments by key influencers like Kylie Jenner and Rihanna have seen the share price drop significantly.