Data shows nearly half of Snapchat's revenue comes from Discover ads
Almost half of Snapchat's revenue last year was generated by ads within the Discover section of the photo-sharing app, according to new estimates from research firm eMarketer.
Snapchat generated $149.8 million in revenue, 43% of its total US revenues in 2016, from the ad format, eMarketer estimated.The Discover section gives users access to stories from its media partners, which range from the National Geographic to Cosmopolitan. Users are shown ads in between articles and videos. Revenue share from those ads differs depending on whether publishers sold the ads themselves or they let Snapchat's sales team sell them.
EMarketer expects Snapchat will more than double its total US annual revenues in 2017, from $348 million to $804 million in 2017.
The most revenue growth is projected to come from the Stories format, which eMarketer projects will be bigger than the Discover format in 2018. The Live Stories section is a curated collection of snaps, submitted by users or brands at a specific event edited together by the Snapchat staff. EMarketer's "Live Stories" figure also includes ad revenue generated from the "Stories" that users share with their Snapchat friends.
Marketers can show consumers ads in between the different snaps of a Story. However, a recent report from Digiday suggested media buyers have been cooling on the live format over the last year.
Snapchat's location-specific ads, Sponsored Geofilters, made up only 8% of Snap's total revenue in 2016 bringing in $29.2 million, according to eMarketer.
Snapchat parent company Snap is expected to list its shares on the New York Stock Exchange this week, which will reveal its official revenue figures.
In the run-up to its estimated $20-25 billion public offering, Snap has looked to give advertisers a more rounded set of measurement and targeting options. It recently partnered with Oracle Data Cloud to enable consumer targeting similar to Facebook and Google as well as giving advertisers the possibility to buy ads based on ratings similar to television.
Snap has also recently been seeking upfront spending commitments from ad agencies of $200 million. WPP, the biggest of the six major ad groups, said it spent $90 million on Snapchat ads in 2016.