Dive Brief:
- Twitter saw total revenue rise 37% year-over-year to $1.28 billion in the third quarter, per an earnings report. The social platform's revenue from advertising rose 41% YoY to $1.14 billion.
- While YoY ad revenue slowed compared to the second quarter, execs cited a "modest" impact from Apple's recent tracking changes, suggesting the company is emerging relatively unscathed in relation to other social media platforms, according to its earnings call. Executives attributed a solid reliance on Apple's SKAdNetwork alternative for the so-far clean transition. This quarter's YoY ad growth was the strongest for Twitter's Q3 in the past three years.
- The earnings also gave more information about the impending sale of mobile advertising network MoPub to AppLovin, namely, that projected total revenue loss will be between $200 and $250 million after the deal closes, which is expected to take place in Q1 2022. Going forward, Twitter is turning its focus to its shopping capabilities as well as monetizing products for creators, including Tips, Super Follows and Ticketed Spaces — all of which were rolled out this quarter.
Dive Insight:
Though it's still too early to predict the long-term ramifications of Apple's App Tracking Transparency (ATT) framework on social platforms, Twitter in the short term appears to have avoided significant impact. The hit to revenue was "less than expected," and the company has incorporated ongoing modest expectations into its Q4 guidance, per a letter to shareholders.
The company's reliance on SKAdNetwork, or SKAN, is partially responsible for mitigating the blow, CFO Ned Segal said on the call. SKAN increased by 30% the number of iOS customers to whom Twitter has been able to show its ads, which the company has then reported on — via an anonymized aggregated basis — to advertisers.
"There's just a lot of signal, both from showing ads to people and also reporting and how campaigns have performed on Twitter historically, where there has been room for us to improve," Segal said on the earnings call.
Twitter's experience with SKAN has proved to be better than that of other social media companies including Snap, which missed its Q3 targets by $3 million, per an earnings report earlier this week. The framework was an unreliable measurement solution compared to other first- and third-party alternatives, according to Snap's CBO Jeremi Gorman, who also cited frustrations around "Apple's fixed definitions of advertiser success."
As for its impending sale of MoPub, Twitter does not expect to recoup the loss in revenue, and said it will need time before its shift in focus toward monetizing its owned media yields results. Still, the company made no changes to its goal of generating at least $7.5 billion in annual revenue in 2023.
Monetization has fueled recent developments on the app, mainly in the form of new platforms that could potentially attract creators. Tips allows users to pay their favorite accounts directly through their profiles, and now includes Bitcoin as a payment option. Super Follows is another way for users to express their affinity for creators, and Ticketed Spaces puts an admission fee on real-time audio conversations in the app.
Shopping also continues to be a focus for the company. A select number of big brands were announced as pilot partners early in the quarter, and as Twitter looks to build out the platform for businesses of all sizes, it's focusing on streamlining the viewing and purchasing process.
"We now have business profiles to differentiate businesses from your account and mine on Twitter," CEO Jack Dorsey said in the Q&A portion of the earnings call. "We will also make it so you can buy product straight from those profiles. So stay tuned for that."
