Advertising looks to be a lucrative space for Twitter Inc (NYSE:TWTR). Auto-play video and Off- Twitter ads were responsible for the increase of ad engagements by 165%. Subsequently, average cost per ad engagement dropped by 39% from the previous year. This was particularly attractive for advertisers.
Advertising remains the sole gaining area for the company. Ad revenues jumped 60% to $513 million. The figure would have been 67% in the absence of currency exchange rate changes. Twitter’s main priority is to get maximum users and make them use Twitter as often as they can. What matters is the resultant advertising revenues.
Twitter has been aggressively implementing measures to monetize on ad-dollars. The last quarter of this year will let advertisers purchase Twitter’s Promoted Tweets within Alphabet Inc (NASDAQ:GOOGL)’s DoubleClick display-ad buying software. DoubleClick ad exchange is a real-time marketplace to buy and sell display advertising space. To boost membership, Twitter is leveraging traditional media. It will start broadcasting television ads during the upcoming World Series baseball championship.
Twitter currently has over 100,000 active advertisers. This has happened because of the effort to get small and mid-sized enterprises to advertise. This sector makes up 60% of display advertising and a significant percentage of search ads. Twitter said it’s trying to get millions of smaller advertisers by targeting the nine million businesses who are Twitter users.
Twitter had earlier reported an increase in revenue in its third quarter. However, the rate of growth in active users was the least since it joined the stock market two years ago. Twitter had 320 million active users that was an increase from a four million from the previous quarter. The organization had revenue of $569m an increase of 58% from the same period the previous year. The company’s shares dropped 11% subsequent to the results announcement.
While Twitter enjoys tremendous popularity with celebrities as well as media outlets, it has disappointed in raking up the mass numbers characteristic of Facebook Inc(NASDAQ: FB). Even Facebook’s Instagram has 400 million customers and is growing at a quicker rate than Twitter.
Mr. Jack Dorsey Chief Executive said that it would take a while for the organization to demonstrate significant user growth. He added that the company’s focus is on three things- a more ordered execution, making the services simple and superior communication of brand value. He concluded by saying they had made significant progress in all three fronts.
If Twitter can get hold of the large amount of money spent annually from display ads its advertising business is bound to surge appreciably.
Sources: wsj, bbc, forbes