The One Somewhat Bright Spot For Embattled Twitter: Advertising

Despite Twitter’s current problems and stock drop, this article claims that the one positive area for the company seems to be advertising. Although user growth rose only 8 percent from last year, there was a 60% jump in ad revenues to $513 million. This led analysts to claim that the company is still valuable to a large group of advertisers and should be looked at in terms of revenue enhancements, such as the growing use of video.

Advertisers particularly like Twitter’s new auto play video ads due to them having to be seen for at least 3 seconds for advertisers to have to pay for them. Since these new video ads have been introduced, marketers have seen an 84% drop in cost per view. There has also been a seven fold increase in the amount of videos being watched to the end. This has led Twitter’s COO to state that video has been a huge driver for them this past quarter. Twitter will be building on this next quarter when they launch ‘Promoted Moments’; a new feature where ads look like, and appear in ‘Moments’.

The article also states that Twitter currently has over 100,000 active advertisers, and is looking to start targeting the 9 million small businesses that already use Twitter. Due to the rise in auto-play video ads and off-Twitter ads, ad engagement has risen 165% and cost per ad engagement has fallen 39%. All of this makes Twitter look more attractive to marketers. The author also points out that due to a deal with Google, advertisers will be able to buy ad space on Twitter using Google’s DoubleClick display-ad buying system.

The article finishes by stating Twitter still has a long way to go in attracting new advertisers. He also states that they are held back by the fact that few advertisers are effectively able to measure the results of their ads inside the Twitter app. Twitter is facing many issues, but the author says if this trend continues, there could be high growth in their advertising business for years to come.

Questions:

  1. Do you think that Twitter’s attempts to attract more advertisers to their platform will hurt them in the long run by putting off current users or slowing user growth?
  2. What matters more for a social media company such as Twitter: growth in advertising revenue or user growth?

http://www.forbes.com/sites/roberthof/2015/10/27/the-one-somewhat-bright-spot-for-embattled-twitter-advertising/

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