Tuesday, August 9, 2022

Twitter Earnings Shed Little Gentle on Advert Progress

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newest quarterly earnings announcement, possible one of many final such stories it can make earlier than

Elon Musk

is about to take over, offered little perception into the progress and plans in regards to the social-media firm’s promoting enterprise.

The corporate withdrew all beforehand offered objectives and outlook, and didn’t host an earnings name or launch a shareholder letter to supply extra perception.

The subsequent alternative for a glimpse at Twitter’s technique for its advert enterprise is prone to come subsequent week on the Interactive Promoting Bureau NewFronts displays, the place corporations equivalent to ByteDance Ltd.’s TikTok,

Amazon.com Inc.


Meta Platforms Inc.

will pitch advertisers about content material and instruments. Twitter nonetheless plans to host a presentation on Wednesday.

Twitter’s advert enterprise is in a brand new highlight since its board accepted a $44 billion supply from Mr. Musk to purchase the corporate and take it non-public. The deal will see Twitter’s annual curiosity burden bounce to $845 million yearly from $51 million in 2021.

Mr. Musk has criticized the corporate’s reliance on promoting, which is by far Twitter’s chief income supply, comprising about 92% of whole income within the first quarter. Mr. Musk has stated Twitter ought to shift towards a enterprise mannequin that depends extra on subscriptions. Twitter Blue at the moment provides premium options like “undo tweet” for a month-to-month price of $2.99. Mr. Musk has prompt the subscription embody eradicating all advertisements.

Twitter’s promoting income has climbed steadily over the previous decade however stays far smaller than that of


Platforms and

Alphabet Inc.’s

Google. On Thursday, Twitter reported that its promoting income rose 23% to $1.11 billion within the first quarter, a 26% improve on a constant-currency foundation. Meta’s promoting income totaled $27 billion within the quarter, whereas Google’s was $54.7 billion in the identical interval.

Advertisers have typically used Twitter’s platform to lift model consciousness alongside large occasions and sports activities. The corporate stated final 12 months that about 85% of its annual promoting income got here from model promoting budgets, specializing in advertising and marketing targets equivalent to curiosity and consciousness, and 15% from efficiency or direct-response promoting, which drives a shopper to take an motion like downloading an app or visiting a website.

That 15% lags behind friends in social media,


analysts stated in a be aware this week. And it has made the corporate extra vulnerable to entrepreneurs pulling again on broad brand-building advertisements, a cause that Twitter’s advert income suffered greater than some rivals in 2020 because the pandemic started.

Twitter Chief Govt

Parag Agrawal

has stated the corporate’s long-term objective was to see a good break up between branding and direct-response promoting income. Twitter lately has constructed new expertise to encourage such a shift.

New merchandise embody buttons that may take customers to particular URLs or app-store pages. The corporate additionally examined an e-commerce supply known as Twitter Outlets, which lets retailers publish mini catalogs of merchandise on the app.

Thursday’s earnings report didn’t point out whether or not these efforts particularly are getting any traction, however they’re suggestive, stated

Brian Wieser,

international president of enterprise intelligence at ad-buying big GroupM.

“Twitter shouldn’t be a platform that has been essentially identified for being a performance-based surroundings,” Mr. Wieser stated. “However I do assume that, regardless of the supply, the expansion that they’re seeing suggests constructive developments.”

Write to Katie Deighton at katie.deighton@wsj.com and Megan Graham at megan.graham@wsj.com

Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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