Dive Brief:
- Twitter’s latest earnings report did little to ease concerns among investors, with Twitter acknowledging in the earnings that its revenue will remain flat and might even drop.
- While analysts expected revenues of $678 million, the company projected revenues somewhere between $590 million and $610 million, according to the Financial Times. The news caused Twitter’s share price to drop by 11%.
- Twitter also reported some user growth — a critical challenge for the social media company as it looks to take on behemoth Facebook and fend off growing competitors like Snapchat — but not enough to please investors. The company grew its user base 1% over the last quarter, from 310 million monthly active users to 313 million.
Dive Insight:
Just when things were looking up for Twitter, it all comes crashing back down again.
eMarketer recently predicted Twitter's stagnant user base is expected to grow 11% this year, while a fast-growing string of live streaming video deals with the NFL, MLB, NBA and NHL offered Twitter a new revenue stream and attraction for users. The emphasis on live streaming video has been a key component of CEO Jack Dorsey's turnaround plan, but it's as yet unclear if it will translate to new users and stronger ad revenue.
In a letter to shareholders, the social media company cited pricing pressures and online video ads for a weakened advertiser demand, while also acknowledging its ads are priced at a premium compared to social media competitors.
The news comes at a time when Twitter is launching a new marketing campaign, “See what’s happening,” to reintroduce the brand to new users who know the brand but don't use its platform. About 90% of consumers worldwide know the Twitter brand, but still don’t understand exactly what it means to use the micro-blogging platform.
According to letter, Twitter won't change its pricing model, but does recognize it needs to find a way to attract more of social media marketing budgets, and find new inroads into ad segments like mobile video and direct response advertising.
Before the recent run of positive news, Twitter had been taking a beating in the marketplace due to investor concerns over the growth of its user base and being surpassed by Instagram and Snapchat in key user metrics. The future of its ad model may rest on the success of its myriad of live streaming sports deals and the revenue opportunities those partnerships may open up for Twitter.
