The unicorn of social media startups managed to become a worthy opponent to Facebook, Twitter, and other behemoths of the industry. The 5-year-old company has just gone public, and the investors are buzzing around its IPO. On the other hand, market researchers are not so excited about this achievement. On the contrary, they predicted lower revenue expectations for the company from the beginning. After its competition borrowed Snapchat’s original concept of using photos as transient messages instead of immortalizations, the company seems to be cornered from all directions.
eMarketer Has Low Revenue Expectations for Snapchat
As of recently, the market research company eMarketer brought some negative speculations regarding the social media platform, Snapchat. The company targets the ad revenue expectations. From the target revenue of $800 million, the researcher lowered the price range to up to $770 million. The reason behind this lack of confidence in the social media platform lies in its relationship with partners.
As a way to offer an extremely tempting incentive, Snapchat attracts content publishers that employ the Publisher Stories format through revenue sharing. According to eMarketer, the company will have to indemnify earnings to its partners that are much higher than the expected range. At the same time, Snapchat encourages the production of original shows. This direction might benefit more the content producer than the company itself.
Snapchat Keeps Growing its Publisher Stories Platform
On the other hand, Snapchat might not be in such a critical situation as eMarketer portrayed. The misinterpretation might come from the model of how Snap reports its gross revenue. The amount publisher partners earn through their revenue sharing entitlement figures as just an item in the cost of revenue for the company. Thus, it is uncertain how much Snapchat pays its partners in this respect.
Over the last year, the company managed to sign contracts with several valuable high-profile publishers. Thus, ABC, BBC, NBC, New York Time, Turner, A+E Networks, Discovery, Vice, and Time are expected to come up with original shows exclusively for the Snap social media platform. This signifies that the company is still hunting for publishers. On the other hand, analysts fear that the increased revenue sharing might hinder the company to reach its $1 billion top line. As long as the Publisher Stories platform keeps growing, investors should expect a massive boost of the cost of goods.
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