Snapchat's Global Opportunity - eMarketer

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Snapchat's Global Opportunity

More than 1.5 billion consumers worldwide will use a mobile messaging app this year

February 6, 2017

In its initial filing ahead of a public offering, Snapchat acknowledged a long list of competitors in the social chat space.

The global social messaging app space is indeed competitive. There’s Facebook Messenger, WhatsApp, WeChat and Line, to name just a few. eMarketer estimates more than 1.5 billion consumers worldwide are expected to use a mobile messaging app this year, an increase of 12.2%.

But the huge growth in recent years appears to have eased. eMarketer expects penetration rates will register small gains in the coming years, rising from 58.9% of mobile phone internet users in 2017 to 61.2% in 2019.

The more pressing issues for social chat apps now are engagement, usage and monetization. Most mobile messaging apps are developing into bigger platforms that offer far more features than just one-to-one communication tools. Snapchat made its mark initially for its “disappearing” posts, but now stands apart as an entertainment platform as well, complete with original TV-inspired content.

“Other messaging apps are focusing on driving mobile commerce via chatbots, like Facebook Messenger, or official accounts, like WeChat,” said Cathy Boyle, principal analyst at eMarketer. “The downside of Snapchat’s entertainment approach is it increases its reliance on advertising as its sole source of revenue.”

(Snapchat does have a payments platform, Snapcash. But it has seen little uptake in the US, unsurprisingly, where users have resisted platforms efforts to layer in ecommerce services.)

However, Snapchat’s user base has plenty of room to grow. The company reported 158 million daily global users as of Q4 2016, up from 46 million in Q1 2014.

While the global market is saturated with mobile messaging apps, Snapchat has an opportunity to reach more users in different markets—especially ones where advertisers are spending heavily on mobile ads, like China, the UK, Germany and Australia.

By concentrating on these markets instead of making Snapchat accessible everywhere—which would require lighter versions of the app for countries where smartphone adoption isn’t as widespread, or where lower-end smartphones dominate the market—the company can focus on innovation rather than iteration, Boyle said.

Introducing innovative new features will be required for the app to compete for users against Facebook and other local rivals, especially now that a lot of these competitors have integrated many of Snapchat’s core features, she said.

—Rimma Kats

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