Media

Why Snap has its eye on TV partnerships

Evan Spiegel and Bobby Murphy, founders of Snapchat.
J. Emilio Flores | Corbis | Getty Images

Snap Inc.'s dealmaking with big media companies like Turner shows its desire to dip into sizable television advertising budgets in addition to getting dollars earmarked for digital ads.

Snap and Turner said Wednesday they are expanding their partnership. The deal will bring more media properties to Snapchat Discover and offer more coverage of Turner's sports events. In addition, Turner will develop projects for upcoming Snapchat shows. The two companies will collaborate on ad sales, with Snap taking the lead for any Discovery ads. Turner will be in charge of selling ads on Live Stores and upcoming shows.

Snap has signed a similar deal with NBCUniversal, as well as other partnerships for content with leagues like the NFL and MLB.

Facebook and Google will take about 46 percent of the $194.6 billion global digital advertising budget this year, according to eMarketer. But in the U.S. market, some estimates are as high as 85 percent.

All other media companies split what's left of the digital ad budget. For a company like Snap that has its biggest presence is in the U.S., it could mean taking a fraction of the remaining 15 percent.

However, if Snap partners with traditional media companies, it has a chance to take a part of TV ad budget in addition to a digital share. Magna Global estimated that both digital and TV ad sales will reach $68 billion in the U.S. this year respectively, with digital budgets increasingly steadily. By 2020, Magna Global predicts that U.S. digital ad sales will reach $105 billion, or 51 percent of U.S.

The deal can also be a win for Turner. The Snap opportunity gives it a chance to branch out into younger audiences. The company said that it current reaches 80 percent of U.S. adults 18 and over, including 73 percent of millennials every month through its content.

Disclosure: NBCUniversal is the parent company of CNBC.