Snap’s Advertising Dilemma

Going into 2016, Snap executives set a high bar for themselves in trying to pull in around $300 million in revenue—many times last year’s number. With the year nearly over, Snap has far exceeded that target, according to multiple people close to the company, and going into 2017 has again set an aggressive goal of $1 billion.

Next year they’ll have to do it under the glare of public scrutiny that will accompany its expected public offering. But it could be an uphill struggle, as some marketers have already balked at increasing their spending on Snap. They see the ad formats it offers as hard to use, say ad executives.

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But once Snap goes public, and has to report its revenue quarterly, its growth will be scrutinized closely. That will make it more important for Snapchat to ease the friction of buying ads on the platform, either by working directly with advertisers or successfully expanding its partners and capabilities of the ads’ API. Otherwise, next year’s high bar for revenue could be a tough-to-reach mark. And it’s one that, if missed, could result in some real consequences.

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