eMarketer cuts Snapchat’s ad revenue by $30 mn

The 2017 advertising revenue forecast for Snap Inc's Snapchat has been cut by $30 million due to higher than expected revenue sharing with its partners, digital marketing firm eMarketer's  latest ad spending forecast, revealed yesterday.

Snap may be expected to report $770 million advertising revenue in 2017, according to eMarketer.

Though this still represented growth of over 157 per cent over last year, it was lower than eMarketer's prior forecast in September, which was projected over $800 million.

The revenue sharing details were disclosed in the company's SEC filing ahead of this month's initial public offering.

The bulk of Snap's overall revenue comes from advertising. The US digital advertising market is expected grow 16 per cent to $83 billion, from last year.

The company's stock surged in its first two days of public trading, trading as high as $27 a share on the New York Stock Exchange, but shares dropped in the second week, and were now trading at $21 a share, as investor concerns rise over slowing user growth.

According to eMarketer's projections, Facebook Inc's share of the US digital ad market is likely to increase to nearly 20 per cent this year and Alphabet Inc's Google projected by eMarketer to continue to command nearly 41 per cent.

According to eMarketer analyst Cathy Boyle, the adjustment in advertising revenue did not reflect a material concern about Snap's business, rather it reflected a more precise view of how much money Snap shared with publishers.

Specifically, according to eMarketer, revenue sharing with advertising partners, which included the companies that took out vertical video ads and had spots in Snapchat's Discover section, stood higher than previous estimates. Snap had partnerships with publishers including The Washington Post, BuzzFeed,  CNN and  Vice, with Vice just announcing an agreement yesterday to  produce exclusive video content for Snapchat.