Twitter, the microblogging service that Wall Street loves to hate, has surprised analysts and marketers alike with its Q1 2017 results. Let’s see what took everyone by surprise.
Twitter’s audience growth reversed course, showing almost 3% quarter-over-quarter growth. Twitter hasn’t seen this level of user growth in two years:
Mobile growth remained at 83% of its user base accessing the service via mobile device:
Whether or not this is an anomaly will be seen in the next two quarters; if Twitter can show growth rates north of 2.5%, that places it near Facebook’s quarter-over-quarter user growth, a sign that the service has returned to good health.
What of their ad effectiveness?
Twitter’s first quarter revenue plummeted by -25%:
It’s normal and expected for social networks to see a sharp decline in their Q1 revenue following the Q4 holiday spending binge that marketers go on every year. However, this Q4/Q1 reversal is the sharpest yet. We see that in the year-over-year look at quarterly revenue. Examine the blue bars showing successive first quarters:
We see a sharp year-over-year decline in first quarter revenue above.
What contributed to these dismal ad revenue results? Twitter cited the following in their earnings letter:
We’re continuing to showcase this value with our largest ad partners, highlighting the improved ROI from both our audience growth and better pricing — with a more than 60% year-over-year improvement in cost per ad engagement.
Essentially, in closing the gap on pricing to be more competitive with other social networks, Twitter has decreased the revenue it makes from ads.
Average revenue per user fell significantly below $2 per user, the generally accepted standard of social network financial health:
Looking Ahead: What It Means for Marketing and PR
Our guidance remains largely unchanged from previous quarters; one positive quarter of growth doesn’t make for a trend yet. Twitter is still the best choice for major events, conferences, and the news of the day. Its influence on social media analytics is still second to none. Twitter should remain a part of your digital marketing mix if major events, news, and conferences are part of your marketing mix as well.
Because of its open data and analytics, Twitter is still a rich source for qualitative social media data. It plus Instagram form the backbone of most influencer programs, so if your plans call for influencer activations, continue to use, grow, and nurture your Twitter community.
As with so many other social networks, Twitter’s earnings call emphasized the high performance of video content. Focus on the creation and distribution of video, especially for paid advertising.
With 328 million monthly active users, it’s still not a platform you can discount immediately. Time will tell whether Twitter’s growth can be sustained; plan for both scenarios. Plan for a scenario where Twitter becomes fashionable again, and plan for a scenario in which it returns to its plateau.
Christopher S. Penn
Vice President, Marketing Technology