Snapchat boasts one of the most popular apps among young people, growing interest among advertisers and — unlike other richly valued start-ups — is planning on going public next year.
Snap can build a lucrative and highly profitable billion-dollar ad business within the next few years, even if it doesn't rival the top players, according to analysts and several media executives.
"There's a lot of money to go around," said Cathy Boyle, principal analyst at eMarketer. "The challenge for anyone outside those top five companies is how much is going to be left for all of them to share. ... There's still [ad] money to be moved from traditional channels into digital. That's where these other companies, anyone outside the top five, have the ability to compete to get those funds."
Snap Inc. recently filed paperwork for an initial public offering that values its company at more than $20 billion, according to Reuters.
The company only comes in 18th on eMarketer's list of top global digital advertising revenue drivers in 2016, with the firm projecting it will make $370 million. For comparison, it estimates that Google will grab $63.11 billion in digital advertising revenue, while Facebook will bring in $25.94 billion.
EMarketer has projected that global advertising revenue would reach $542.55 billion in 2016, while ZenithOptimedia pegged the figure at a slightly higher $579 billion. During the first half of 2016 in the U.S. alone, brands spent $32.7 billion on digital advertising, according to the Interactive Advertising Bureau.