Snapchat's UK ad revenue growth slows, but it is set to capture more teen users

Snapchat is set to make £68.4 million ($88.1 million) in U.K. ad revenues this year, down from a projected £104.8 million.

Figures from eMarketer show that while Snapchat's ad revenues will increase to around £136 million in 2020, its share of companies' digital ad spend will grow slowly.

Currently, Snapchat takes 0.5 percent of the digital advertising market in the U.K., which is up from 0.3 percent in 2017, but below a predicted 0.8 percent. Google, meanwhile, takes 39.1 percent of digital ad spend in the U.K., with Facebook controlling 21.7 percent.

One of the reasons Snapchat's ad revenues are set to grow more slowly is its transition to an automated, or programmatic, ad system. It launched this self-service ad platform in June 2017 — while this has increased the number of advertisers, the cost of ads has reduced, according to eMarketer's Principal Analyst Debra Aho Williamson.

"Programmatic ads are typically cheaper because the automated auction infrastructure reduces (and sometimes eliminates) the need for salespeople to get involved," Williamson said in an emailed statement.

"Some advertisers report strong ROI (return on investment) from programmatic ads on Snapchat, but many others remain skeptical. They are concerned about the size of Snapchat's audience and feel that measurement and targeting still lag behind Facebook."

However, the number of people using Snapchat at least once a month will grow 8.6 percent to 16.2 million U.K. users, ahead of user growth for Facebook and Twitter but slower than Instagram, which is set to grow 9.7 percent to 19.1 million active U.K. users. Facebook is set to have 32.7 million active users in the U.K. this year, while Twitter will have 12.7 million.

Shares of Snapchat's parent company Snap rose as much as 5 percent Tuesday after Instagram co-founders Kevin Systrom and Mike Krieger announced they were leaving the photo-sharing social network.

Snap announced a partnership with Amazon on Monday, allowing people to point their smartphone's camera at a real-life item and then find it to buy on the e-commerce site. It's currently just a small trial, but Snap's share price rose about 3 percent on the news, although it's not clear whether the companies will share revenue when someone buys a product.