We lowered our Snapchat ad revenues forecast twice because of the company's shift to selling ads programmatically, which eroded its ad prices. Since adopting automated selling, Snapchat’s CPMs fell below $10 and have stayed there, according to Digiday. Previously, Snapchat used a managed-service ad selling model, and back in 2015, it reportedly charged brands $750,000 per day to advertise on its platform.
“Self-serve programmatic buying has expanded Snapchat's reach to more advertisers, especially small and medium-sized businesses that can invest in ads at lower bid prices. However, moving the vast majority of their ad inventory into this lower cost structure has tempered earlier growth estimates,” said Monica Peart, senior forecasting director at eMarketer.
Another issue: Snapchat's user growth has stalled. The worldwide average daily active user base (DAU) for the app was 186 million in Q4 2018, unchanged from Q3. Some ad industry observers blame Snapchat’s lack of user growth on its controversial November 2017 redesign.
We expect Snapchat’s US monthly user base to decline 2.8% this year to 77.5 million. However, we expect Snapchat to increase its worldwide monthly user base 11.3% to 297.7 million in 2019. But its latest earnings report indicates that the increase in infrequent monthly users hasn’t translated to an uptick in habitual daily users. Note: Snapchat doesn’t release monthly active user (MAU) figures.