Twitter Reaps from Ad Refresh in Q2, but Slowdown Maybe Impending

Brief

  • During the second quarter of 2019, Twitter beat the expectations of Wall Street analysts, reporting 18% YoY growth in revenue to get to $841 million.
  • The platform reported 21% YoY ad revenue growth to $727 million while total engagements grew 20%. The company said that the cost-per-engagement remained flat. The US market stood out, making $455 million ad sales. The new metric, mDAUs, (monetizable daily active users) reported a 14% YoY growth to 139 million.
  • Twitter, writing to stakeholders said that the Q3 would see slower growth in revenue. The slowdown was attributed to the company retiring some older formats. The company expects that improvements to performance, stability and scale of the ad formats on mobile will impact revenue. Twitter also redesigned its desktop app, a move that has met both positive and negative user reviews.

Insight

Twitter is focusing on making advertising on the platform more relevant to the user and engaging. To that end, the company has introduced fresh video offerings and machine learning, which appear to have paid off in the first half of the year. The platform has seen an increase in user numbers and revenues, which could be offset as the year ends due to the introduction of new ad formats. The platform is looking to clean up its health in general, removing bot accounts and standing against abuse.

‘Health is a priority for us. We are proud of what we did in Q2,’ says Jack Dorsey, the CEO in a statement. The statement noted an 18% drop in suspicious and spammy behaviour. ‘Additionally, we shall use machine learning to give users relevant content, drive user numbers and increase mDAUs.’

Purely based on user engagement, the results of the company are reliable, with a 5 million increase in mDAUs during the first quarter. However, the metric is rather unusual. It replaces monthly active users, which has been a challenge for the platform. The metric is not based on standardized industry methodology going by a report by TechCrunch. It is difficult to compare growth with other tech peers.

Twitter defines the metric as the number of users who log in to the app and can see ads on any day, and so the increase might still attract advertisers. There are significant opportunities for marketing that come down to the pike as the platform is spotlighted in areas like live video.

NBC said that it would create a daily studio show for Twitter as part of covering the Tokyo 2020 Olympics. The network is expecting to receive more than $1.2 billion ad sales for the games.

In recent months, Twitter has expanded its advertiser tools to drive revenue. The CFO of the company, Ned Segal, revealed efforts to invest in promotion for the app for direct response marketing. At the time, Segal said video ads constituted over 50% of the platform’s ads in a year. At VidCon, the platform announced ArtHouse, a new creative division to help brands with video creation, digital strategy, influencer management and live-streaming.

Credit: https://www.mobilemarketer.com/news/twitters-ad-refresh-pays-off-in-q2-but-slowdown-could-be-coming/559622/

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