The advertising market as seen by Snapchat

We read through Snapchat’s public filing and found some great data.  Aside, from the information about the company (158 million people use Snapchat daily, over 2.5 billion Snaps are created every day, the community spends on average 25 to 30 minutes a day on Snapchat, and 25% of daily active users post to their Story), there are charts worth sharing about the overall advertising market.  Below are a few we pulled.

 

Ad spend is migrating towards mobile, albeit there is still plenty of spend in traditional channels.  Worldwide advertising spend is expected to grow from $652 billion in 2016 to $767 billion in 2020. Mobile advertising is the fastest growing segment of this market, and is expected to grow nearly 3x from $66 billion in 2016 to $196 billion in 2020, while all other advertising spend is expected to decrease by approximately $15 billion during the same time period.  The table below is advertising spend in billions. 

 

 

People are spending more time on mobile than TV.  Time spent on mobile is growing, especially as people spend more time watching videos on mobile.  According to forecasts by eMarketer and IDC for 2016, respectively, U.S. adults will spend 26% of their time consuming media on mobile devices, while only 13% of U.S. advertising will be spent on mobile.  The chart below shows the percentage of time spent with major media each day by US adults.   

 

 

The chart below shows percent of ad spend by media. 

 

 

TV is for old people.  Finally, the chart below shows the change in time spent watching traditional TV (both live and DVR’d) during Q2 2016 as compared to Q2 2010.  According to Nielsen, people between the ages of 18 and 24 spent 35% less time watching traditional (live and time-shifted) television in an average month during the second quarter of 2016 compared to the second quarter of 2010

 

 

So what do we think? While there is no doubt mobile is eating into TV’s market share, there is still plenty of advertising dollars out there to be had in TV land. Additionally, while the projected growth of mobile ad spend looks compelling, we do believe it might be overstated unless the experience of consuming an ad on mobile can be improved dramatically from where it is today. 

 

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