The 140 character social network released its Q1 2016 earnings. Did it hit its targets, or did the little blue bird simply fly face-first into a glass window? Let’s look at the numbers.
After a miss in Q4 2015, Twitter’s monthly active users has ticked back up to 1.64% quarter-over-quarter, adding 5 million new monthly active users. This is still anemic growth compared to previous first quarter user reports, but is an improvement over the previous quarter’s loss:
Mobile user growth tells a similar story:
Of interest is that Twitter’s mobile users as a percentage of its audience base has now reached 83%. The increase in mobile users as a percentage of the entire audience base is no surprise; mobile has eaten the Internet.
Compared to the previous quarter, this is the number that shocked investors: 17.16% quarter over quarter loss in ad revenue. That’s a giant number; Twitter’s revenue has always been soft in the first quarter compared to the previous year’s fourth quarter. This year, the loss was over $100 million. In their earnings notes, they attributed the loss in part to brands spending differently. Instead of driving net new revenue, brands took funding away from Promoted Tweets to reallocate to video – and not all the video was Twitter’s.
Of note in the call details is that Twitter’s revenue from mobile has increased to 88% of all revenue; they are clearly a mobile ad platform first.
This put their revenue per user back well below the $2 per user magic number, for which investors punished them:
Looking Ahead: What It Means for Marketing and PR
Twitter is under dual mandates to increase user growth and set revenue back on track. These are difficult objectives to balance even in the best of times. Twitter will be under pressure by investors to accelerate revenue, and the emphasis on their new ad products in the earnings call notes displays this imperative.
Twitter expects to grow dynamic ads using its TellApart technology in Q2, via the Ads API. These dynamic ads supposedly boast a 2x conversion rate, so be on the lookout for announcements. As with all new ad technologies, first-mover advantage yields huge rewards. Be first in your industry.
Twitter’s integration with DoubleClick is expected to launch in Q3; marketers should expect probably Q4 or Q1 2017 access at a broad level. This integration will let us manage ads on Twitter from inside Google’s DoubleClick ad network.
More important, Twitter’s forays into video are at significant risk from Facebook Live and Snapchat. Both competitors have strong offerings and differentiators which separate them from Twitter’s Periscope. If you aren’t already duo-casting or tri-casting your live video events, consider it. With Facebook Live, Periscope is at significant risk.
Here’s a media mentions chart of the two services, Periscope video and Facebook Live video, sorted by week:
You don’t need to be a data scientist to figure out what’s happening there. Twitter’s Periscope service, from a conversational standpoint, is losing ground to Facebook Live.
Our best advice? Continue marketing on Twitter organically. Pay attention to new ad formats as they come out and seize first-mover advantage. Most important, keep an eye towards how Facebook cannibalizes from Twitter’s share of mind, then allocate resources accordingly.
Christopher S. Penn
Vice President, Marketing Technology