Facebook Inc. and Snap Inc. could be sitting on a $16 billion revenue opportunity.
In her annual internet trends report released Wednesday, Kleiner Perkins Caufield & Byers partner Mary Meeker pointed to a gap in the monetization of mobile users in the U.S. Time spent on mobile had increased to 28% of total media consumption time in 2016, while advertising agencies were only allocating 21% of their spending there. Meeker thinks that is a huge opportunity waiting for online advertising platforms like Facebook
, Snapchat parent Snap
and Alphabet Inc.’s Google.
Forrester researchers expect advertising spend to more than double from 2016 to 2021. As of May 2016, the researchers pegged mobile advertising spending at 48% of online advertising spending in the U.S., which they expected to grow to 70%.
Facebook has said it plans to decelerate the ad load on the Facebook newsfeed in the second half of the year, which could impede its opportunity to grab a great deal more from mobile advertising on its core product. Instead, analysts expect the company to place greater emphasis on the monetization of other apps like Instagram.
That could leave room for Snap, as the social media company works to increase its average revenue per user and recover from a large net loss in its first quarter as a public company. Snap’s strategy has been to extract more money from its small but engaged user base, rather than compete for more users with the likes of Facebook.
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Snap had 166 million daily active users at the end of the first quarter, with average revenue per user of 90 cents globally and $1.81 in North America. Facebook had 1.28 billion daily active users with average revenue per user of $4.23 world-wide and $17.07 in the U.S. and Canada as of the first quarter.
To boost its revenue, Snap has been turning to original content, including partnerships with media agencies such as Comcast Corp.’s
NBCUniversal and Walt Disney Co.’s
ESPN, which could bring in greater advertising potential.
Mobile advertising made up $37 billion of the total $73 billion in U.S. internet advertising spending in 2016, according to Meeker’s report.
Other mediums are more aligned, according to the annual report, with internet time spent and ad spending matching at 20% and television time spent increasing to 38%, matching advertising spending. Globally, however, the report has internet advertising spending passing television advertising spending as of 2016.