Snapchat's ad revenue to reach near $1 billion by 2017, says report

Snapchat's ad revenue will grow to almost $1 billion in 2017, according to a new report by market research company eMarketer.

Emarketer said that the social app is poised to earn $935.46 million in ad revenue next year, about 2 percent of total social network ad spend. This year, the firm projects Snapchat will earn about $366.69 million.

"Advertisers are attracted to Snapchat for its broad reach among young millennials and those in Generation Z, which are valuable demographic groups for many businesses," eMarketer principal analyst Cathy Boyle said in a statement. "To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads, and more sponsored geofilters and sponsored lenses."

Marketers are expected to spend about $68.82 billion advertising on digital platforms this year, according to eMarketer.

Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL) dominate the majority of digital advertising budgets, with sources saying to CNBC that the two companies account for 50 to 70 percent of the pie.

While Snapchat's stake is small, the fact that it makes up 31.6 percent of social network users in the U.S. per eMarketer makes it a company to watch. More than 100 million people use Snapchat every day, according to the company, and the majority of users are under 35.

In June, the tech company opened up its advertising application-programming interface (API) to third parties , signalling that it would allow more companies to use their proprietary data and formulas to target users similar to its competitors.

Snapchat declined to comment.

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