State of Social Q4 2017: Twitter Becomes Profitable

Twitter, the 140-character stream of what’s happening now, surprised investors by announcing that it was finally revenue-positive after over a decade. Let’s dig into everything they announced.

Audience Growth

The statistic that alarmed investors was Twitter’s flat user growth, which was a repeat of the year before:

Twitter now addresses 330 million users around the world; their presence is largely international. Only 69 million of those users are in the United States.

When we look at comparable quarters from years past, we see a 0.9% increase in Q3 growth from Q3 of 2016.

Twitter’s growth remains low compared to its peers, but it’s stable.

One question answered during the earnings call about membership numbers is that Twitter has been more stringent about removing bots and spam from its service. While it still has a long way to go, their information quality efforts have a side effect of removing accounts from the system, causing flat-line growth as fake and malicious accounts vanish.

Let’s turn our eyes towards revenue.

Ad Revenue

Twitter had its best quarter of revenue ever at $644M in advertising revenue:

Year over year, their revenue is now positive, 0.9% growth year-over-year by quarter:

As a revenue-positive, profitable company, Twitter has – for now – achieved sustainability, a rare feat in the current age.

Implications for Marketing and Communications

Twitter isn’t going anywhere. By becoming profitable, Twitter has the opportunity – as long as the trend continues – to be a solid alternative to the overwhelming dominance of Facebook. In fact, with Snapchat’s earnings call also being a generally positive one, we question whether any kind of perceived backlash against Facebook is subtly benefiting other networks.

In the earnings call, Twitter CEO Jack Dorsey pointed out that of all their ad formats, their Website Card and Video Card formats – direct response – were driving some of the highest performance. As with so many other advertising tools, it behooves brands and communicators to test the efficacy of each of the formats for cost effectiveness and impact.

One caution is that, as other social networks are doing due to political considerations, Twitter is becoming more aggressive in identifying low-value automated content and accounts. If your Twitter strategy involves significant amounts of automation and no engagement, consider changing strategies to focus on an engagement-first strategy. The more organic engagement your handle drives, the less likely it is to be flagged as a low-value automated account and suspended.

Our guidance remains largely unchanged from previous quarters. Twitter is still the best choice for major events, conferences, and news of the day. Twitter should remain a part of your digital marketing mix if major events, news, and conferences are part of your marketing mix as well.

Christopher S. Penn
Vice President, Marketing Technology

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